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TABLE OF CONTENTS
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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RED ROBIN GOURMET BURGERS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Table of Contents
RED ROBIN GOURMET BURGERS, INC.
6312 South Fiddler's Green Circle, Suite 200N
Greenwood Village, CO 80111
(303) 846-6000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 27, 2010
To
our Stockholders:
The
annual meeting of stockholders of Red Robin Gourmet Burgers, Inc. will be held at 9:00 a.m. MDT, on Thursday, May 27, 2010, at our corporate headquarters,
located at 6312 South Fiddler's Green Circle, Suite 200N, Greenwood Village, Colorado 80111, for the following purposes:
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1)
-
To
elect Lloyd L. Hill and Stuart I. Oran as Class II directors of the Company for three-year terms;
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2)
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To
approve the proposed amendment to the Amended and Restated Certificate of Incorporation, as amended, to adopt a majority voting standard for uncontested
director elections;
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3)
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To
ratify the appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the fiscal year ending
December 26, 2010; and
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4)
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To
transact such other business as may properly come before the meeting.
Stockholders
of record at the close of business on April 9, 2010 are entitled to notice of, and to vote at, the annual meeting or any postponement or adjournment thereof.
Your
attention is directed to the accompanying proxy statement, which includes information about the matters to be considered at the annual meeting and certain other important
information. We encourage you to carefully review the entire proxy statement.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 27, 2010:
The proxy statement and proxy card are available at
http://www.redrobin.com/eproxy.htm
.
We
cordially invite you to attend the annual meeting. Whether or not you plan to attend, please sign and return the enclosed proxy card as promptly as possible in the envelope enclosed
for your convenience. Should you receive more than one proxy card because your shares are registered in different names and addresses, each proxy card should be signed and returned to assure that all
your shares will be voted.
Accompanying
this notice and proxy statement is a copy of our 2009 Annual Report on Form 10-K.
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By Order of the Board of Directors,
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Pattye L. Moore
Chair of the Board of Directors
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Greenwood
Village, Colorado
April [ ], 2010
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TABLE OF CONTENTS
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RED ROBIN GOURMET BURGERS, INC.
6312 South Fiddler's Green Circle, Suite 200N
Greenwood Village, CO 80111
(303) 846-6000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 27, 2010
The
board of directors of Red Robin Gourmet Burgers, Inc. (the Company) is soliciting the enclosed proxy for use at our annual meeting of stockholders to be held on Thursday,
May 27, 2010, beginning at 9:00 a.m. MDT, at our corporate headquarters, located at 6312 South Fiddler's Green Circle, Suite 200N, Greenwood Village, Colorado 80111, and at any
time and date to which the annual meeting may be properly adjourned or postponed. This proxy statement and the accompanying Notice of Annual Meeting of Stockholders describe the purpose of the annual
meeting. Distribution of these proxy solicitation materials is scheduled to begin on or about April 26, 2010. The proxy statement and proxy card are also available at
http://www.redrobin.com/eproxy.htm
.
ABOUT THE MEETING
Why am I receiving this proxy statement and proxy card?
You have received these proxy materials because our board of directors is soliciting your proxy to vote your shares at the annual
meeting. This proxy statement describes issues on which we would like you to vote at our annual meeting of stockholders. It also provides you with information on these issues so that you may make an
informed decision on the proposals to be voted on at the annual meeting.
What is the purpose of the annual meeting?
At our annual meeting, stockholders will vote on the following three items of business:
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1)
-
To
elect Lloyd L. Hill and Stuart I. Oran as Class II directors of the Company for three-year terms;
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2)
-
To
approve the proposed amendment to the Amended and Restated Certificate of Incorporation, as amended, to adopt a majority voting standard for uncontested
director elections; and
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3)
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To
ratify the appointment of Deloitte & Touche LLP as the Company's independent registered public accounting firm for the fiscal year ending
December 26, 2010.
You
will also vote on such other matters as may properly come before the meeting or any postponement or adjournment thereof.
What are the board's recommendations?
Our board of directors recommends that you vote:
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FOR election of each of the two (2) nominated directors (see Proposal 1).
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FOR the approval of the proposed amendment to the Amended and Restated Certificate of Incorporation, as amended, to
implement a majority voting standard for uncontested director elections (see Proposal 2); and
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FOR ratification of the appointment of Deloitte & Touche LLP as the Company's independent registered public
accounting firm for the fiscal year ending December 26, 2010 (see Proposal 3).
With
respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the board of directors or, if no recommendation is given, in their
own discretion.
What shares are entitled to vote?
As of April 9, 2010, the record date for the meeting, we had shares of common stock outstanding. Each share of our common stock
outstanding on the record date is entitled to one vote on all items being voted on at the meeting. You can vote all of the shares that you owned on the record date. These shares include:
(1) shares held directly in your name as the stockholder of record, and (2) shares held for you as the beneficial owner through a stockbroker, bank or other nominee.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Most stockholders hold their shares through a broker or other holder of record rather than directly in their own name. As summarized
below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record.
If your shares are registered directly in your name with our transfer agent, American Stock Transfer &
Trust Company,
you are considered, with respect to those shares, the stockholder of record, and we are sending these proxy materials directly to you. As the stockholder of record, you have the right to grant your
voting proxy directly to the named proxy holder or to vote in person at the meeting. We have enclosed a proxy card for you to use.
Beneficial Owner.
If your shares are held in a brokerage account, or by a bank, or other holder of record, you are considered the
beneficial owner of
shares held in street name, and these proxy materials are being forwarded to you from that holder together with a voting instruction card. As the beneficial owner, you have the right to direct your
broker, bank or other holder of record how to vote and are also invited to attend the annual meeting.
Since
a beneficial owner is not the stockholder of record, you may not vote these shares in person at the meeting unless you obtain a "legal proxy" from the broker, bank or other holder
of record that holds your shares, giving you the right to vote the shares at the meeting. Your broker, bank or other holder of record has enclosed or provided voting instructions for you to use in
directing the broker, bank or other holder of record how to vote your shares.
Who may attend the meeting?
All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. If you are not a stockholder of record
but hold shares through a broker or bank (i.e., in street name), you should provide proof of beneficial ownership on the record date, such as your most recent account statement as of
April 9, 2010, a copy of the voting instruction card provided by your broker, bank or other holder of record, or other similar evidence of ownership. Registration and seating will begin at
8:30 a.m. Cameras, recording devices and other electronic devices will not be permitted at the meeting.
How may I vote my shares in person at the annual meeting?
Shares held in your name as the stockholder of record may be voted in person at the annual meeting. Shares held beneficially in street
name may be voted in person only if you obtain a legal proxy from the broker, bank or other holder of record that holds your shares giving you the right to vote the shares. Even if you plan to attend
the annual meeting, we recommend that you also submit your proxy
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or
voting instructions prior to the meeting as described below so that your vote will be counted if you later decide not to attend the meeting.
How may I vote my shares without attending the annual meeting?
Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted
without attending the meeting. If you are a stockholder of record, you may vote by submitting a proxy. If you hold shares beneficially in street name, you may vote by submitting voting instructions to
your broker, bank or other holder of record. For directions on how to vote, please refer to the instructions included on your proxy card or, for shares held beneficially in street name, the voting
instruction card provided by your broker, bank or other holder of record.
May I change my vote or revoke my proxy after I return my proxy card?
Yes. Even after you have submitted your proxy, you may change the votes you cast or revoke your proxy at any time before the votes are
cast at the meeting by: (1) delivering a written notice of your revocation to our corporate secretary at our principal executive office, 6312 South Fiddler's Green Circle, Suite 200N,
Greenwood Village, Colorado 80111; or (2) executing and delivering a later dated proxy. In addition, the powers of the proxy holders will be suspended if you attend the meeting in person and so
request, although attendance at the meeting will not by itself revoke a previously granted proxy.
What is a broker non-vote?
There is an important change this year regarding broker non-votes and director elections. Under a new rule that is
effective for the annual meeting, brokers, banks or other holders of record are no longer permitted to vote in the election of directors if the broker has not received instructions from the beneficial
owner. This represents a change from prior years, when brokers had discretionary voting authority in the election of directors. In these cases, the broker can register your shares as being present at
the annual meeting for purposes of determining the presence of a quorum but will not be able to vote on those matters for which specific authorization is required under the new rules. This is called a
"broker non-vote." If you are a beneficial owner whose shares are held of record by a broker, bank or other holder of record, you must instruct the broker, bank or other holder of record
how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which the broker does not have discretionary authority to vote. Accordingly, it is
particularly important that beneficial owners instruct their brokers how they wish to vote their shares.
At
this annual meeting, your broker, bank or other holder of record does not have discretionary voting authority to vote on the election of directors or the adoption of an amendment to
the Amended and Restated Certificate to approve a majority voting standard without instructions from you, in which case a broker non-vote will occur and your shares will not be voted on
these matters. However, if you are a beneficial owner whose shares are held of record by a broker, your broker has discretionary voting authority under the new rules to vote your shares on the routine
matter of ratification of Deloitte & Touche LLP, even if the broker does not receive voting instructions from you.
What constitutes a quorum?
The presence at the meeting, in person or by proxy, of the holders of a majority of the shares of our common stock outstanding as of
the record date will constitute a quorum. There must be a quorum for any action to be taken at the meeting (other than an adjournment or postponement of the meeting). If you submit a properly executed
proxy card, even if you abstain from voting, then your shares will be counted for purposes of determining the presence of a quorum. If a broker indicates on a proxy for which it lacks discretionary
authority as to certain shares to vote on a particular matter,
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commonly
referred to as "broker non-votes," those shares will still be counted for purposes of determining the presence of a quorum at the meeting.
What vote is required to approve each item?
Election of Directors.
In the election of directors, two candidates will be elected by a plurality of affirmative votes.
Note
that the existing plurality vote standard will be in effect for this annual meeting. Stockholder approval of the majority voting standard will enable the board of directors to amend the Amended and
Restated Certificate of Incorporation, as amended, and the Third Amended and Restated Bylaws to provide for a majority voting standard, which we expect will be in effect for the 2011 annual meeting.
See Proposal 2 for a discussion of majority voting in uncontested director elections
.
Majority Voting Standard.
The proposed amendment to the Amended and Restated Certificate of Incorporation, as amended, to adopt a
majority voting
standard for uncontested director elections requires the affirmative vote of sixty-six and two thirds percent (66
2
/
3
%) of the outstanding shares entitled to vote at the
annual meeting.
Ratification of Deloitte & Touche LLP.
The affirmative vote of the majority of the outstanding shares of common stock
present in person
or by proxy will be required for approval.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, it means that you hold shares registered in more than one name or brokerage account. You
should sign and return all proxies for each proxy card that you receive in order to ensure that all of your shares are voted.
How may I vote on each of the proposals?
In the election of directors, you may vote
FOR
either or both of the nominees, or your
vote may be
WITHHELD
with respect to either or both of the nominees. For the other matters, you may vote
FOR
or
AGAINST
each proposal, or you may indicate that you wish to
ABSTAIN
from voting on a proposal.
Who will count the proxy votes?
Votes will be counted by our transfer agent, American Stock Transfer & Trust Company, which has been appointed to act as the
inspector of election for the annual meeting.
How will voting on any other business be conducted?
We do not expect any matters to be presented for a vote at the meeting other than the matters described in this proxy statement. If you
grant a proxy, either of the officers named as proxy holder, Dennis B. Mullen or Katherine L. Scherping or their nominee(s) or substitute(s), will have the discretion to vote your shares on any
additional matters that are properly presented for a vote at the meeting. If a nominee is not available as a candidate for Class II director, the person named as the proxy holder will vote your
proxy for another candidate nominated by our board of directors.
What rights of appraisal or similar rights of dissenters do I have with respect to any matter to be acted upon at the meeting?
No action is proposed herein for which the laws of the state of Delaware or our bylaws provide a right of our stockholders to dissent
and obtain appraisal of or payment for such stockholders' common stock.
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How do I submit a stockholder proposal for consideration at next year's annual meeting?
Proposals for Inclusion in Proxy Statement.
For your proposal or director nomination to be considered for inclusion in our proxy
statement for next
year's meeting, your written proposal must be received by our corporate secretary at our principal executive office no later than December 27, 2010. If we change the date of next year's meeting
by more than 30 days from the date of this year's meeting, then the deadline is a reasonable time before we begin to print and mail our proxy materials. You should also be aware that your
proposal must comply with Securities and Exchange Commission (SEC) regulations regarding inclusion of stockholder proposals in company-sponsored proxy materials and our bylaws.
Proposals to be Addressed at Meeting (but not included in proxy statement).
In order for you to raise a proposal (including director
nominations)
from the floor during next year's meeting, our corporate secretary must receive a written notice of the proposal no later than March 12, 2011 and no earlier than February 10, 2011, and
it must contain the additional information required by our bylaws. All proposals received after March 12, 2011 will be considered untimely. You may obtain a complete copy of our bylaws by
submitting a written request to our corporate secretary at our principal executive office. If we change the date of next year's meeting by more than 30 days from the date contemplated at this
year's meeting, in order for the proposal to be timely, we must receive your written proposal at least 90 days
before the date of next year's meeting or no more than 10 days following the day on which the meeting date is publicly announced.
STOCK OWNERSHIP OF CERTAIN PERSONS
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with
respect to securities. Except as indicated by footnote, and except for community property laws where applicable, the persons named in the tables below have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership for each table is based on 15,615,095 shares of common stock outstanding as of
March 31, 2010.
Stock Ownership of Certain Beneficial Owners
The following table sets forth information regarding beneficial owners of more than 5% of our common stock as of March 31, 2010.
All information is taken from or based upon ownership filings made by such persons with the SEC or upon information provided by such persons to the Company.
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Shares Beneficially Owned
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Name and Address of Beneficial Owner
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Amount and
Nature of
Beneficial
Ownership
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Percent of Class
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FMR LLC(1)
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2,336,831
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14.96
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%
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Thomson Horstmann & Bryant, Inc.(2)
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1,385,900
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8.87
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%
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BlackRock, Inc.(3)
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1,176,344
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7.53
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%
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Michael J. Snyder(4)
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1,101,635
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7.05
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%
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Scopus Asset Management, L.P.(5)
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942,893
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6.03
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%
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Clinton Group, Inc./Spotlight Advisors, LLC(6)
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870,486
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5.57
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%
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(1)
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This
disclosure is based on an amendment to Schedule 13G filed with the SEC on February 16, 2010. The Schedule 13G/A was filed on
behalf of FMR LLC and Edward C. Johnson 3d, Chairman of FMR LLC, with an address of 82 Devonshire Street, Boston, Massachusetts 02109. The Schedule 13G/A discloses that they had
sole power to dispose or to direct the disposition of 2,336,831 shares. These shares are beneficially owned through Fidelity Management and Research
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Company,
Pyramis Global Advisors, LLC and Pyramis Global Advisors Trust Company, wholly owned subsidiaries of FMR LLC, and Fidelity International Limited, a partnership controlled by the
Johnson family.
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(2)
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This
disclosure is based on an amendment to Schedule 13G filed with the SEC on January 28, 2010. The address of this reporting person is 500
Boylston Street, Boston, Massachusetts 02116. At the time of filing, the reporting person reported being a registered investment advisor that has sole voting and sole dispositive power over 1,385,900
shares.
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(3)
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This
disclosure is based on the Schedule 13G filed with the SEC on January 29, 2010. The address of this reporting person is 40 East
52
nd
Street, New York, New York 10022. At the time of filing, the reporting person reported being a holding company that has sole voting and sole dispositive power over 1,176,344
shares.
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(4)
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This
disclosure is based on an amendment to Schedule 13G filed with the SEC on February 12, 2007. The address of the reporting person is 1301
5
th
Avenue, Suite 3525, Seattle, Washington 98101.
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(5)
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This
disclosure is based on the Schedule 13G filed with the SEC on March 23, 2010. The address of this reporting person is 623
5
th
Avenue, 31
st
Floor, New York, New York 10022. At the time of filing, the reporting person reported being an investment manager to one or more private
investment funds and an institutional managed account that has shared voting and shared dispositive power over 942,893 shares.
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(6)
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This
disclosure is based on an amendment to Schedule 13D filed with the SEC on March 23, 2010 pursuant to a joint filing agreement dated
December 21, 2009 by and among Clinton Group, Inc. (CGI), Spotlight Advisors, LLC (SAL), Clinton Magnolia Master Fund, Ltd. (CMAG), George Hall and Gregory Taxin. At the
time of filing, by virtue of investment management agreements with CMAG (reported being a corporation), CGI (reported being an investment adviser and corporation) has the power to vote or direct the
voting, and to dispose or direct the disposition, of all of the 870,486 shares beneficially owned by CMAG. By virtue of his direct and indirect control of CGI, George Hall (reported being an
individual) is deemed to have shared voting power and shared dispositive power with respect to all Shares as to which CGI has voting power or dispositive power. By virtue of his direct control as
managing member of SAL, Gregory Taxin (reported being an individual) is deemed to have shared voting power and shared dispositive power with respect to all shares as to which SAL has voting power or
dispositive power. The address of CGI, SAL, George Hall and Gregory Taxin is 9 West 57
th
Street, 26
th
Floor, New York, New York 10019. The address of CMAG is
c/o Fortis Fund Services (Cayman) Limited, P.O. Box 2003
Stock Ownership of Directors and Management
The following table contains information about the beneficial ownership (unless otherwise indicated) of our common stock as of
March 31, 2010 by:
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each of our directors, including the board's nominees for election or re-election;
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each executive officer named in the Summary Compensation Table; and
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all directors and current executive officers as a group.
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Shares Beneficially Owned(1)
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Name of Beneficial Owner
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Amount and
Nature of
Beneficial
Ownership
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Percent of Class
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Dennis B. Mullen(2)
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190,060
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1.22%
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Katherine L. Scherping(3)
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13,810
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*
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Todd A. Brighton(4)
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57,862
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*
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Eric C. Houseman(5)
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57,369
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*
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Susan Lintonsmith(6)
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10,866
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*
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Robert Aiken(7)
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417
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*
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Edward T. Harvey(8)
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35,875
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*
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Lloyd L. Hill(9)
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417
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*
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Richard J. Howell(10)
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25,675
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*
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Pattye L. Moore(11)
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18,375
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*
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Stuart I. Oran(12)
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417
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*
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James T. Rothe(13)
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30,075
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*
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J. Taylor Simonton(14)
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25,375
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*
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Gary J. Singer(15)
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34,893
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*
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Marcus Zanner(16)
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19,292
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*
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Directors and Executive Officers as a group (17 persons)(17)
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533,370
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3.37%
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*
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Represents
beneficial ownership of less than one percent (1.0%) of the outstanding shares of our common stock.
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(1)
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If
a stockholder holds options, restricted stock units or other securities that are currently exercisable or that vest or become exercisable within
60 days of March 31, 2010, we treat the common stock underlying those securities as owned by that stockholder, and as outstanding shares when we calculate the stockholder's percentage
ownership of our common stock. However, we do not consider that common stock to be outstanding when we calculate the percentage ownership of any other stockholder.
-
(2)
-
Consists
of 83,751 shares of restricted stock held directly by Mr. Mullen, 100,059 shares of common stock held directly by Mr. Mullen and
6,250 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject to certain forfeiture
restrictions that vest as follows: (a) with regard to 25,000 of the shares, such shares vest on December 31, 2010, (b) with regard to 3,126 of the shares, such shares vest in two
equal installments on February 26
th
of each of 2011 and 2012, (c) with regard to 50,000 of the shares, such shares shall vest in two equal installments on
December 31
st
of each of 2011 and 2012, and (d) with regard to 5,625 shares, such shares shall vest in three equal installments on
February 24
th
of each of 2011, 2012 and 2013.
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(3)
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Consists
of 3,500 shares of restricted stock, 3,000 shares of common stock held directly by Ms. Scherping, 4,810 shares held by Ms. Scherping
in joint tenancy with her husband, 2,500 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010, and excludes 3,000
shares of common stock held by Ms. Scherping's husband of which she disclaims beneficial ownership. The restricted stock is subject to certain forfeiture restrictions that vest as follows:
(a) with regard to 1,250 of the shares, such shares vest in two equal installments on February 26
th
of each of 2011 and 2012, and (b) with regard to 2,250 of
the shares, such shares vest in three equal installments on February 24
th
of each of 2011, 2012 and 2013.
-
(4)
-
Consists
of 3,500 shares of restricted stock held directly by Mr. Brighton, 27,862 shares of common stock held directly by Mr. Brighton, and
26,500 shares of common stock subject to options that are
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currently
exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject to certain forfeiture restrictions that vest as follows: (a) with regard to
1,250 of the shares, such shares vest in two equal installments on February 26
th
of each of 2011 and 2012, and (b) with regard to 2,250 of the shares, such shares
vest in three equal installments on February 24
th
of each of 2011, 2012 and 2013.
-
(5)
-
Consists
of 7,000 shares of restricted stock held directly by Mr. Houseman, 21,369 shares of common stock held directly by Mr. Houseman and
29,000 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject to certain forfeiture
restrictions that vest as follows: (a) with regard to 2,500 of the shares, such shares vest in two equal installments on February 26
th
of each of 2011 and 2012, and
(b) with regard to 4,500 of the shares, such shares vest in three equal installments on February 24
th
of each of 2011, 2012 and 2013.
-
(6)
-
Consists
of 3,500 shares of restricted stock held directly by Ms. Lintonsmith, 4,866 shares of common stock held directly by
Ms. Lintonsmith and 2,500 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject
to certain forfeiture restrictions that vest as follows: (a) with regard to 1,250 of the shares, such shares vest in two equal installments on February 26
th
of each
of 2011 and 2012, and (b) with regard to 2,250 of the shares, such shares vest in three equal installments on February 24
th
of each of 2011, 2012 and 2013.
-
(7)
-
Consists
of 417 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010.
-
(8)
-
Consists
of 750 shares of restricted stock held directly by Mr. Harvey, 625 shares of common stock held directly by Mr. Harvey, 15,000 shares
of common stock held by Mr. Harvey in joint tenancy with his wife and 19,500 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of
March 31, 2010. The restricted stock is subject to certain forfeiture restrictions that vest on May 27, 2010.
-
(9)
-
Consists
of 417 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010.
-
(10)
-
Consists
of 750 shares of restricted stock held directly by Mr. Howell, 625 shares of common stock held directly by Mr. Howell, 4,000 shares
of common stock held by Mr. Howell in joint tenancy with his wife, 800 shares of common stock held indirectly in trusts for the benefit of Mr. Howell's children and 19,500 shares of
common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject to certain forfeiture restrictions that
vest on May 27, 2010.
-
(11)
-
Consists
of 750 shares of restricted stock held directly by Ms. Moore, 625 shares of common stock held directly by Ms. Moore, 7,500 shares of
common stock held indirectly by an entity owned and managed by Ms. Moore and her husband and 9,500 shares of common stock subject to options that are currently exercisable or exercisable within
60 days of March 31, 2010. The restricted stock is subject to certain forfeiture restrictions that vest on May 27, 2010.
-
(12)
-
Consists
of 417 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010.
-
(13)
-
Consists
of 750 shares of restricted stock held directly by Mr. Rothe, 4,825 shares of common stock held directly by Mr. Rothe and 24,500
shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject to certain forfeiture
restrictions that vest on May 27, 2010.
-
(14)
-
Consists
of 750 shares of restricted stock held directly by Mr. Simonton, 5,125 shares of common stock held directly by Mr. Simonton and
19,500 shares of common stock subject to options that are
8
Table of Contents
currently
exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject to certain forfeiture restrictions that vest on May 27, 2010.
-
(15)
-
Consists
of 750 shares of restricted stock held directly by Mr. Singer, 625 shares of common stock held directly by Mr. Singer, 9,018 shares
of common stock held indirectly by Mr. Singer as trustee of the Singer Family Trust UAD 8/10/2000, as amended, and 24,500 shares of common stock subject to options that are currently
exercisable or exercisable within 60 days of March 31, 2010. The restricted stock is subject to certain forfeiture restrictions that vest on May 27, 2010.
-
(16)
-
Consists
of 17,000 shares of common stock held directly by Mr. Zanner and 2,292 shares of common stock subject to options that are currently
exercisable or exercisable within 60 days of March 31, 2010.
-
(17)
-
Includes
189,793 shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 31, 2010.
Equity Compensation Plan Information
We maintain five equity-based compensation plansthe 2000 Management Performance Common Stock Option Plan (the 2000 Stock
Plan), the 2002 Stock Incentive Plan (the 2002 Stock Plan), the 2004 Performance Incentive Plan (the 2004 Plan), the 2007 Amended and Restated Performance Incentive Plan (the 2007 Plan) and the
Employee Stock Purchase Plan (the ESPP). Our stockholders have approved each of these plans.
The
following table sets forth for our equity compensation plans in the aggregate, the number of shares of our common stock subject to outstanding options and rights under these plans,
the weighted-average exercise price of outstanding options, and the number of shares remaining available for future award grants under these plans as of December 27, 2009:
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
Number of securities
remaining available for
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
727,284
|
(1)
|
$
|
23.07
|
|
|
1,398,705
|
(2)
|
Equity compensation plans not approved by security holders
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
727,284
|
|
|
|
|
|
1,398,705
|
|
-
(1)
-
This
aggregate amount of 727,284 consists of the following number of options then outstanding under each of the plans:
|
|
|
|
|
1,612
|
|
|
|
2000 Stock Plan
|
134,432
|
|
|
|
2002 Stock Plan
|
132,046
|
|
|
|
2004 Plan
|
459,194
|
|
|
|
2007 Plan
|
|
|
|
|
|
|
(2)
|
|
Of the aggregate number of shares that remained available for future issuance as of December 27, 2009, 179,413 shares were available for issuance under the ESPP and 1,219,292 shares were available for issuance under
the 2007 Plan. Any shares subject to options granted under the 2000 Stock Plan, the 2002 Stock Plan or the 2004 Plan that are not exercised before they expire or are terminated will expire and not be available for additional award grants. No new
awards may be granted under the 2000 Stock Plan, the 2002 Stock Plan or the 2004 Plan.
|
9
Table of Contents
PROPOSAL 1
ELECTION OF DIRECTORS
General
As of the date of this proxy statement, our board of directors consists of eleven directors, which will be reduced to nine directors
immediately following the annual meeting. Our Amended and Restated Certificate of Incorporation, as amended, provides for three classes of directors with staggered three-year terms.
Class II currently consists of four directors whose terms expire at this annual meeting; Class III currently consists of three directors whose terms expire at our 2011 annual meeting;
and Class I currently consists of four directors whose terms expire at our 2012 annual meeting.
Our
board of directors has nominated Lloyd L. Hill and Stuart I. Oran to continue to serve as our Class II directors. Gary Singer and Edward Harvey, both of whom are currently
serving as Class II directors, have advised the Company that they will not stand for re-election at the 2010 annual meeting. Accordingly, we will reduce the size of the board to
nine directors to take effect immediately following the annual meeting. If elected, Messrs. Hill and Oran will continue to serve in office until our annual meeting in 2013 and until their
successors have been duly elected and qualified, or until the earlier of their respective deaths, resignations or retirement.
Messrs. Hill
and Oran have each consented to be named as a nominee in this proxy statement, and we expect that Messrs. Hill and Oran will be able to serve if elected.
Should either of Messrs. Hill or Oran become unable or unwilling to accept his nomination for election, our board of directors can name a substitute nominee and the persons named as proxies in
the proxy card, or their nominees or substitutes, will vote your shares for such substitute nominee unless an instruction to the contrary is written on your proxy card.
Directors and Nominees
Below, you can find the principal occupation and other information about each of the Class II directors and each of the other
directors whose term of office will continue after the meeting.
Director NomineesClass II Directors
Lloyd L. Hill
, 66, joined the Company as a director in March 2010. Mr. Hill is
the former Chairman and CEO of Applebee's International, Inc. (Applebee's), based in Overland Park, Kansas. Mr. Hill joined Applebee's as chief operating officer in January 1994, and was
named president in December 1994. He became co-chief executive officer in January 1997; chief executive officer in January 1998; and was elected Chairman of the Board in May 2000.
Mr. Hill first began serving on Applebee's board as an independent member in 1989 and served until November 2007. Mr. Hill retired as chief executive officer of Applebee's in September
2006.
Prior
to joining Applebee's, Mr. Hill served as president and director of Kimberly Quality Care (KQC), a market leader in home healthcare and nurse personnel staffing.
Mr. Hill received his master's degree in business administration from Rockhurst University in Kansas City, Missouri.
Key Attributes, Experience and Skills:
Mr. Hill brings to the board of directors, among his other skills and qualifications, executive leadership and operations skills
developed from his years of experience as a chief executive officer of several companies. As Chairman and Chief Executive Officer of Applebee's, Mr. Hill substantially expanded Applebee's
business while successfully maintaining relationships with Applebee's stockholders. Under Mr. Hill's leadership, Applebee's grew into the largest casual dining concept in the world, with nearly
1,900 restaurants in 49 states and 17 countries. In 2005, Mr. Hill was named by Institutional Investor magazine as one of America's Best CEOs and as one of the top-performing CEOs
within the
10
Table of Contents
restaurant
industry. Mr. Hill also brings deep knowledge of the casual-dining industry. In light of the foregoing, our board of directors has concluded that Mr. Hill should be elected as
a member of our board of directors.
Other Public Company Board Service:
None.
Recent Past Public Company Board Service:
Applebee's International, Inc. (1989-2007).
Stuart I. Oran
, 59, Mr. Oran joined the Company as a director in March 2010. Mr. Oran is the Managing Member of Roxbury
Capital Group LLC, a New York based merchant banking firm he founded in 2002. Mr. Oran is also the co-founder of Bond Street Holdings LLC, a bank holding company
formed to acquired failed banks in FDIC-assisted transactions.
From
1994 to 2002, Mr. Oran held a number of senior executive positions at UAL Corporation and its operating subsidiary, United Airlines, including Executive Vice
PresidentCorporate Affairs (responsible for United's legal, public, governmental and regulatory affairs, and all of United's properties and facilities), Senior Vice
PresidentInternational (P&L responsibility for United's international division comprised of its operations and employees (approximately 12,000) in 27 countries), and President and CEO of
Avolar, United's business aviation line of business. During that period, Mr. Oran also served as a director of United Airlines (the operating subsidiary) and several of its subsidiaries, and on
the Management Committee, Risk Management Committee and Alternative
Asset Investment Committee of UAL. Prior to joining UAL and United, Mr. Oran was a corporate partner at the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison.
Key Attributes, Experience and Skills:
Mr. Oran brings to the board of directors, among his other skills and qualifications, valuable business, leadership and
management, and strategic planning experience which he gained during his employment with UAL Corporation and as a board member of Wendy's International, Inc. He also brings significant
knowledge of the restaurant industry from his board service at Wendy's. In addition, Mr. Oran has experience serving as a director of a number of other large public companies which provided him
with extensive corporate governance experience. In light of the foregoing, our board of directors has concluded that Mr. Oran should be elected as a member of our board of directors.
Other Public Company Board Service:
Deerfield Capital Corp. (2008-present).
Recent Past Public Company Board Service:
Hughes Telematics (f/k/a Polaris Acquisition Corp.) (2007-2009) and Wendy's International,
Inc.
(2005-2008).
Continuing Directors for Term Ending Upon the 2011 Annual Meeting of StockholdersClass III Directors
Pattye L. Moore
, 52, joined the Company as a director in August 2007 and was appointed
as Chair of the Board of Directors in February 2010. Ms. Moore is a business strategy consultant and the author of Confessions from the Corner Office, a book on leadership instincts.
Ms. Moore was on the board of directors for Sonic Corp. from 2000 through January 2006 and was the President of Sonic from January 2002 to November 2004. She held numerous senior management
positions during her 12 years at Sonic, including Executive Vice President, Senior Vice PresidentMarketing and Brand Development and Vice PresidentMarketing. Prior to
joining Sonic Corp., she served as a senior executive and account supervisor on the Sonic account at the advertising agency Advertising, Inc.
Key Attributes, Experience and Skills:
Ms. Moore brings to the board of directors, among her other skills and qualifications, significant senior management, marketing,
business strategy and brand development experience as well as deep knowledge of the restaurant industry. During her tenure at Sonic, the company grew from $900 million
11
Table of Contents
in
systemwide sales with 1,100 units to over $3 billion and 3,000 units. Ms. Moore was named one of the top 100 marketers by
Advertising
Age
magazine in 2000 and one of the top 50 women in foodservice by
Nation's Restaurant News
in 2002. Ms. Moore's
directorships at other companies also provide her with extensive corporate governance experience. In light of the foregoing, our board of directors has concluded that Ms. Moore should continue
as a member of our Board.
Other Public Company Board Service:
ONEOK (2002-present).
Recent Past Public Company Board Service:
Sonic Corp. (2000-2006).
Dennis B. Mullen
, 66, was appointed chief executive officer in 2005. He joined the board of directors of the Company in December 2002, and
served as a Chair of the Board from August 2005 to February 2010. Mr. Mullen has more than 30 years experience as a corporate executive in the restaurant industry, and has served as
chief executive officer for several restaurant chains, including Cork & Cleaver Restaurants of Denver, Colorado; Pedro Verde's Mexican Restaurants, Inc., of Boulder, Colorado; Famous
Restaurants, Inc. (operator of Garcia's Mexican restaurants), of Phoenix, Arizona; and BCNW, a franchise of Boston Chicken, Inc., in Seattle, Washington. Mr. Mullen started his
professional career at PricewaterhouseCoopers and also served as the chief financial officer for Lange Ski Boots.
Key Attributes, Experience and Skills:
Mr. Mullen brings to the board of directors, among his other skills and qualifications, his significant knowledge and
understanding of our business and operations. He also has
a vast understanding of the casual-dining industry, which he acquired through his service with the Company and as executive for other casual-dining companies. In light of the foregoing, our board of
directors has concluded that Mr. Mullen should continue as a member of our Board.
Other Public Company Board Service:
Trustee of Janus Investment Funds (1971-present), Janus Aspen Series (1993-present), Janus Adviser
Series
(2000-present), Janus Capital Funds Plc (2004-present). Mr. Mullen served as chairman from 2004 to 2007 for the Janus Investment Funds, Janus Aspen Series and Janus Adviser Series.
Recent Past Public Company Board Service:
None.
Marcus L. Zanner
, 65, joined the Company as a director in June 2009. Mr. Zanner is the former President and majority owner of Great
Western Dining, which operated for more than 25 years with over 40 restaurants, including 13 Red Robin restaurants in Washington that were purchased by the Company in 2006. Mr. Zanner
was associated with the institutional sales division of Merrill Lynch for a period twelve years and has served on the board of directors of Fortune Bank in Seattle, Washington since September 2008.
Mr. Zanner has also served on the board of directors for the Washington Restaurant Association and the National Restaurant Association.
Key Attributes, Experience and Skills:
Mr. Zanner brings to the board of directors, among his other skills and qualifications, extensive restaurant industry experience
along with financial services experience. He has significant knowledge and understanding of our business and operations, industry leadership, and brand familiarity, as well as insight into franchise
operations. In light of the foregoing, our board of directors has concluded that Mr. Zanner should continue as a member of our board.
Other Public Company Board Service:
None.
Recent Past Public Company Board Service:
None.
12
Table of Contents
Continuing Directors for Term Ending upon the 2012 Annual Meeting of StockholdersClass I Directors
Robert B. Aiken
, 47, Mr. Aiken joined the Company as a director in March 2010.
Mr. Aiken previously served as the President and Chief Executive Officer of U.S. Foodservice (USF). At USF, he served as President and CEO from July 2007 to February 19, 2010, and served
as President and Chief Operating Officer from October 2005 to July 2007, and Executive Vice President of Sales/Marketing & Supply Chain from February 2004 to October 2005. Mr. Aiken
resigned from USF effective February 19, 2010, and joined Bolder Capital, a Chicago-based private equity firm, as CEO of their food company portfolio. In his new role at Bolder Capital, he will
focus on investing in specialty, ethnic and natural food processors and distributors.
Prior
to joining USF, Mr. Aiken held several positions from 1994 through 2000 at Specialty Foods Corp. of Deerfield, Illinois, including CEO of its Metz Baking Company subsidiary.
From 2000 until 2004, Mr. Aiken also served as President and Principal of Milwaukee Sign Co. and early in Mr. Aiken's career, he worked as a business lawyer, first with the firm
Sidley & Austin in Chicago and then Wilson, Sonsini, Goodrich & Rosati in Palo Alto, California.
Key Attributes, Experience and Skills:
Mr. Aiken brings to the board of directors, among his other skills and qualifications, experience as a chief executive officer
of a corporation with significant operations and a large, labor-intensive workforce. He gained deep experience in operations and logistics, as well as an understanding of the dining industry through
his service at USF. In light of the foregoing, our board of directors has concluded that Mr. Aiken should continue as a member of our board.
Other Public Company Board Service:
None.
Recent Past Public Company Board Service:
None.
J. Taylor Simonton
, 65, joined the Company as a director in September 2005 and was appointed chair of the Company's audit committee in
October 2005. Mr. Simonton spent 35 years at PricewaterhouseCoopers LLP, including 23 years as an audit partner in the firm's Accounting and Business Advisory Services
practice before retiring in 2001. Until February 2007, Mr. Simonton served on the board of directors of Fischer Imaging Corporation, a public company that designed, manufactured and marketed
specialty medical imaging systems, and served as its audit committee chair. He is currently the audit committee chair of Zynex, Inc., a public company that manufactures and markets medical
devices for the electrotherapy and stroke and spinal injury rehabilitation markets. Mr. Simonton is also lead director and audit committee chair of Keating Capital, Inc., a publicly
reporting closed-end investment fund that makes non-controlling investments in private and small market cap public companies.
Key Attributes, Experience and Skills:
Mr. Simonton brings to the board of directors, among his other skills and qualifications,
significant
experience in accounting and finance that he gained through 35 years of service at PricewaterhouseCoopers, LLC, the world's largest accounting and professional services firm, including
23 years as an Accounting and Business Advisory Partner. In addition, Mr. Simonton is well versed in corporate governance; he holds a Certificate of Director Education from the Corporate
Directors Institute of the National Association of Corporate Directors and serves as the president of the NACD chapter in Colorado. He also has served on several other public company board of
directors. In light of the foregoing, our board of directors has concluded that Mr. Simonton should continue as a member of our board.
Other Public Company Board Service:
Keating Capital, Inc. (May 2008-present) and Zynex, Inc. (October 2008-present).
13
Table of Contents
Recent Past Public Company Board Service:
Fischer Imaging CorporationDenver, CO (January 2003February 2007).
James T. Rothe
, 66, joined the Company as a director in October 2004 and served as chair of the Company's compensation committee from
January 2005 to May 31, 2009. Mr. Rothe has served since January 2004 as Managing Director and co-founder of Roaring Fork Capital Management, LLC, which is the General
Partner of Roaring Fork Capital SBIC, LP with offices in Colorado Springs and Denver, Colorado and Dallas, Texas. Mr. Rothe is a Professor Emeritus of the College of Business at the
University of Colorado at Colorado Springs where he served as Professor 1986-2004 and Dean of the College 1986-1994. Mr. Rothe was also a Principal in the Phillips-Smith
Specialty Retail Group, a venture capital firm (three funds, total $140 million) from 1988-1999. Mr. Rothe served as President of Pearl Vision Center and Texas State Optical. He also
served as Vice President of Marketing and Senior Vice President of Marketing and Merchandising for Pearle Vision Center. Mr. Rothe holds a Ph.D. in marketing and finance from the University of
WisconsinMadison.
Key Attributes, Experience and Skills:
Mr. Rothe brings to the board of directors, among his other skills and qualifications, a
unique
understanding of the Company's strategies and operations through his prior board service. In addition, Mr. Rothe has significant experience in business, financial and management experience that
he gained while helping to build Pearle Health Services, Inc., and participating as a key member of a venture capital partnership that successfully invested in companies such as Bizmart,
PetSmart, Hot Topic and Cheap Tickets. In light of the foregoing, our board of directors has concluded that Mr. Rothe should continue as a member of our board.
Other Public Company Board Service:
Trustee of the Janus Funds (1997-present).
Recent Past Public Company Board Service:
None.
Richard J. Howell
, 67, joined the Company as a director in September 2005. Mr. Howell was an audit partner with Arthur
Andersen LLP for over 25 years before retiring in 2002. /From January 2004 through May 2009, Mr. Howell served as an adjunct professor of auditing at the Cox School of Business at
Southern Methodist University, and he served in a similar capacity from August 2002 to December 2003 at the Neely School of Business, at Texas Christian University.
Key Attributes, Experience and Skills:
Mr. Howell brings to the board of directors, among his other skills and qualifications,
significant
experience in accounting and information systems, as well as knowledge of controls and financial reporting requirements of public companies. In addition, during Mr. Howell's career in public
accounting he gained significant knowledge in due diligence, mergers and acquisitions
and risk management. Mr. Howell's work with audit committees of numerous public reporting companies and his current directorship roles have provided substantial experience in corporate
governance, In light of the foregoing, our board of directors has concluded that Mr. Howell should continue as a member of our board.
Other Public Company Board Service:
Independent Trustee for the LKCM Funds (July 2005-present).
Recent Past Public Company Board Service:
None.
Required Vote
The two persons receiving the highest number of
"FOR"
votes from stockholders in the
election of directors at the annual meeting will be elected.
14
Table of Contents
Recommendation of the Board of Directors
Our board of directors recommends that you vote FOR the election of Mr. Hill and FOR the election of
Mr. Oran as Class II directors on our board of directors.
Selecting Nominees for Director
Our board has delegated to the nominating and governance committee the responsibility for reviewing and recommending nominees for
director. In evaluating a director candidate, the nominating and governance committee will consider the candidate's independence, character, corporate governance skills and abilities, business
experience, industry specific experience, training and education, commitment to performing the duties of a director, and other skills, abilities or attributes that fill specific needs of the board or
its committees. While there is no formal policy with regard to consideration of diversity in identifying director nominees, the nominating and governance committee considers diversity in business
experience, professional expertise, gender and ethnic background, along with various other factors when evaluating director nominees. The nominating and governance committee will use the same criteria
in evaluating candidates suggested by stockholders.
The
nominating and governance committee recommends director candidates for nomination to the board. The board determines which candidates to nominate or appoint, as appropriate, after
considering the recommendation of the committee.
CORPORATE GOVERNANCE AND BOARD MATTERS
Governance Principles
The board and management believe that the Company's relationships with its stockholders and other stakeholders are an important part of
its corporate governance profile, and it recognizes the value of continuing communications. Among other things, engagement with our stockholders helps us to understand the larger context and impact of
our operations, learn about expectations for our performance, and assess emerging issues that may affect our governance practices, business or other aspects of our operations. This approach has helped
us to identify mutual perspectives and goals and to adopt a collaborative approach to these relationships, which has resulted in our receiving essential input from our stockholders. To this end, we
regularly engage with our stockholders through attendance at investor conferences, press releases and other stockholder communications and individual meetings throughout the year.
We
also recognize the connection between good corporate governance and our ability to create and sustain value for our stockholders. Early in the second quarter of 2009, the board
requested that management review certain governance and compensation industry trends and regulatory proposals. In response to evolving governance practices, regulatory changes and concerns of our
stockholders, the Company refined its governance policies, procedures and practices during 2009 and early 2010. The following are examples of the governance changes made by the Company in 2009 and
early 2010:
-
-
We separated the roles of the Chair of the Board and the Chief Executive Officer;
-
-
We added Marcus L. Zanner, a former franchisee with over 25 years of significant restaurant experience, to the
board; and
-
-
We amended Mr. Mullen's employment agreement to eliminate, among other things, the 280G tax gross-up
provisions and reimbursement for travel expenses incurred by Mr. Mullen in commuting between Arizona and Colorado and related tax gross up.
See the discussion of
Mr. Mullen's Employment Agreement
.
In
addition, in December 2009, we were approached by representatives of Clinton Group, Inc. and Spotlight Advisors, LLC, stockholders in the Company. They expressed concern
about the Company's
15
Table of Contents
performance
and business strategy, among other things. Following several meetings and extended discussions, on March 4, 2010, we entered into a letter agreement (the Agreement) with Clinton
Group, Inc. and Spotlight Advisors, LLC, on behalf of themselves and their respective affiliated funds, persons and entities.
Among
other actions taken pursuant to the Agreement, the board has:
-
-
Appointed Robert B. Aiken, Lloyd L. Hill and Stuart I. Oran to the board of directors, and the board is seeking one
additional candidate to serve as an independent director;
-
-
Proposed an amendment to the Company's Amended and Restated Certificate of Incorporation, as amended, to provide for a
majority voting standard in uncontested election of directors; and
-
-
Appointed a succession committee to formalize the search process for a new chief executive officer.
The
board of directors seeks to ensure that good governance and responsible business principles and practices are part of our culture and values and the way we do business. In achieving
this goal, the board of directors has previously established corporate governance guidelines that it follows with respect to corporate governance matters, which are available on the investor relations
section of our website at
www.redrobin.com.
The board of directors reviews the governance guidelines annually to assure that they are timely, effective
and supportive of the board's oversight and other responsibilities.
Board Leadership Structure
The board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structures so as to
provide independent oversight of management. In February 2010, we separated the roles of Chair of the Board and Chief Executive Officer. The board named Pattye Moore as Chair of the Board due to,
among other things, her prior experience on public company boards of directors, as well as her vast understanding of the restaurant industry.
We
believe that having a non-executive chair of the board is in the best interests of the Company and our stockholders. The separation of the roles of Chair of the Board and
Chief Executive Officer allows Mr. Mullen to focus on managing the Company's business and operations, and allows Ms. Moore to focus on board matters especially in light of increasing
regulation and scrutiny on public company boards. Further, we believe that the separation of those roles ensures the independence of the board in its oversight role of evaluating and assessing the
chief executive officer and management generally.
Role in Risk Oversight
Our board, together with our executive officers, has the primary responsibility for enterprise risk management within our Company. The
board delegates many of its risk oversight functions to the audit committee. Under its charter, the audit committee is responsible for discussing with management policies with respect to financial
risk assessment and enterprise risk management, including guidelines to govern the process by which major financial and accounting risk assessment and management is undertaken by the Company. The
audit committee also oversees our corporate compliance programs as well as the internal audit function. In addition to the audit committee's work in overseeing certain risk management functions, our
full board regularly engages in discussions of the most significant risks that the Company is facing and how these risks are being managed, and the board receives reports on these risk areas from
senior officers of the Company. The board believes that the work undertaken by the audit committee, together with the work of the full board and the senior officers of the Company, enables the board
to effectively oversee the Company's risk management.
16
Table of Contents
Board Membership and Director Independence
Our board of directors has determined that each of Robert B. Aiken, Edward T. Harvey, Lloyd L. Hill, Richard J. Howell, Pattye L.
Moore, Stuart I. Oran, James T. Rothe, J. Taylor Simonton and Gary J. Singer qualifies as an independent director under rules promulgated by the SEC and The NASDAQ Stock Market® listing
standards. Only independent directors are appointed to the board's three standing committees; audit committee, compensation committee and nominating and governance committee. Accordingly, all members
of each board committee are independent in accordance with the NASDAQ Stock Market® listing standards. There are no family relationships among any of our executive officers, directors or
nominees for directors.
During
fiscal year 2009, the board of directors held 10 formal meetings in addition to a number of informal telephone conferences. Each of our current directors attended at least 75% of
the aggregate total of meetings of the board of directors and committees on which he or she served. The non-management directors of the Company meet at least quarterly throughout the year
and as necessary or appropriate in executive sessions at which members of management are not present.
The
board of directors strongly encourages each of the directors to attend the annual meeting of stockholders. All of our directors attended our 2009 annual meeting (other than those
directors who joined the board after the 2009 annual meeting).
Committees of the Board of Directors
Our board of directors has established three standing committees: an audit committee, a compensation committee and a nominating and
governance committee. The full text of all of the charters for each board committee is available on the investor relations section of our website at
www.redrobin.com
. Each of our standing committees
meets at least once each quarter. In addition, other regular and special meetings are scheduled as
necessary and appropriate depending on the responsibilities of the particular committee. Each committee regularly meets in executive sessions without management present. The board has also created a
Succession Committee for the purposes of seeking a new chief executive officer of the Company. We expect that this committee will be eliminated following completion of the CEO search.
Audit Committee.
The audit committee is currently comprised of Richard J. Howell (chair), Edward T. Harvey, and J. Taylor
Simonton, and operates
pursuant to a written charter. The audit committee oversees and reviews the preparation and disclosure of the Company's consolidated financial statements and the preparation and filing of periodic
financial reports, which include the requisite certifications by the chief executive officer and chief financial officer. The audit committee is also responsible for selecting and retaining the
independent registered public accounting firm; approving the budget for fees to be paid to the independent registered public accounting firm for audit services and for appropriate
non-audit services; overseeing the relationship between the Company and the independent registered public accounting firm and acting as the board of directors' primary avenue of
communication with them; overseeing enterprise fraud risk, and selecting, retaining and overseeing the internal audit function of the Company. The audit committee's responsibilities also include other
matters as set forth in its charter.
The
board also has determined that each of Mr. Simonton, Mr. Harvey and Mr. Howell is an "audit committee financial expert" as defined by rules adopted by the SEC. A
discussion of the role of the audit committee is provided under "Audit Committee Report."
The
audit committee met 11 times in fiscal year 2009.
Compensation Committee.
The compensation committee is currently comprised of Pattye L. Moore (chair), Lloyd L. Hill (appointed
to the committee in
March 2010), James T. Rothe, and Gary J. Singer. The compensation committee operates pursuant to a written charter. Functions performed by the
17
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compensation
committee include: developing and recommending to the board of directors an annual performance evaluation of our chief executive officer, approving salary and short-term and
long-term incentive compensation programs for all senior executives; and reviewing and adopting employee benefit plans and reviewing and approving compensation for directors.
The
specific nature of the compensation committee's responsibilities as they relate to executive officers is set forth under "Compensation Discussion and Analysis."
The
compensation committee held 9 formal meetings in addition to several informal meetings in fiscal year 2009.
Nominating and Governance Committee.
The nominating and governance committee is currently comprised of Gary J. Singer (chair),
Robert B. Aiken,
Pattye L. Moore, Stuart I. Oran and J. Taylor Simonton and operates pursuant to a written charter. Messrs. Aiken and Oran were appointed to the nominating and governance committee in March
2010. The nominating and governance committee identifies, evaluates and recommends to the board of directors candidates for appointment or election to the board, as appropriate. The committee meets
annually during the fourth quarter to determine whether to recommend to the board to include the nomination of incumbent directors with expiring terms in the proxy statement. The committee meets at
other times as needed to consider candidates to fill any vacancies that may occur. At least once a year, the committee considers whether the number of directors is appropriate for the Company's needs
and recommends to the board any changes in the number of directors, and reviews the performance of the board.
A
stockholder may submit the name of a director candidate for consideration by the nominating and governance committee by writing to: Nominating and Governance Committee, Red Robin
Gourmet Burgers, Inc., 6312 South Fiddler's Green Circle, Suite 200N, Greenwood Village, CO 80111. The stockholder must submit the following information in support of the candidate:
(a) all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and such person's written consent to serve as a director if elected; (b) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the
Company's books, and of such beneficial owner, (ii) the class and number of shares of the Company that are owned beneficially and of record by such stockholder and such beneficial owner,
(iii) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, warrants, convertible securities, stock appreciation
or similar rights, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of such stockholder's notice by, or on behalf of, such stockholder and such beneficial
owner, whether or not such instrument or right shall be subject to settlement in underlying shares of capital stock of the Company, the effect or intent of which is to mitigate loss to, manage risk or
benefit of share price changes for, or increase or decrease the voting power of, such stockholder or such beneficial owner, with respect to shares of stock of the Company, and (iv) whether
either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of the Company's voting shares
required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Company's voting shares to elect such nominee or nominees.
The
nominating and governance committee met 5 times in fiscal year 2009.
Stockholder Communications with the Board of Directors
You may communicate with any director, the entire board of directors, the independent directors or any committee by sending a letter to
the director, the board of directors, or the committee addressed to: Board of Directors, 6312 South Fiddler's Green Circle, Suite 200N, Greenwood Village,
18
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CO
80111, or by sending an e-mail to:
Board@redrobin.com
. The Company's chief legal officer will review all communications, categorize them,
and forward them to the appropriate board member. Messages pertaining to administrative matters, ordinary business matters, personal grievances, and similar issues will be forwarded to the appropriate
member of management.
With
respect to issues arising under the Company's Code of Ethics, you may also communicate directly with the chair of the audit committee or the compliance officer in the manner
provided in the Company's Problem Resolution and Whistleblower Policy and Reporting Procedures. Both the Code of Ethics and the Problem Resolution and Whistleblower Policy and Reporting Procedures may
be found on the investor relations section of our website at:
www.redrobin.com
.
Certain Relationships and Related Transactions
Transactions with Related Persons
Jonathon James.
Jonathon James, our Senior Vice President of Enterprise Services, is a founder and former CEO of GrassRoots Leadership,
LLC
(GRL), a management consulting firm located in Denver, Colorado. Prior to Mr. James' employment with the Company, GRL provided consulting services to the Company from the beginning of September
2006 to October 2009, specifically focusing on executive leadership development, new restaurant opening processes, succession planning, and recruitment and retention processes and assessments. During
fiscal year 2008 and fiscal year 2009, the Company paid GRL approximately $773,000 and $1.2 million, respectively, for consulting services and certain management training material.
Mr. James has informed the Company that he divested his ownership interest in GRL upon acceptance of his position with the Company. The Company may use GRL for future consulting services from
time to time.
Marcus L. Zanner.
Marcus L. Zanner, a director of the Company, is a principal of and holds, directly or indirectly, interests of
between 50% and
66
2
/
3
% in three privately-held entities that hold the leases for three of the Company's restaurants in Washington. Such leases were assumed in connection with the purchase
of the 13 Red Robin® restaurants from Great Western Dining in 2006. For fiscal year 2008 and fiscal year 2009, the Company paid total rent of approximately $1.2 million and
$1.0 million, respectively, for these three restaurants, including percentage rent, and related taxes and fees.
Review, Approval or Ratification of Transactions with Related Persons
The board of directors has recognized that transactions between the Company and certain related persons present a heightened risk of
conflicts of interest. In order to ensure that the Company acts in the best interest of its stockholders, the Board has delegated the review and approval of related party transactions to the audit
committee. Any related party transaction required to be disclosed in accordance with applicable SEC regulations must be reviewed and approved by the audit committee. In reviewing a proposed
transaction, the audit committee must (i) satisfy itself that it has been fully informed as to the related party's relationship and interest and as to the material facts of the proposed
transaction and (ii) consider all of the relevant facts and circumstances available to the committee. After its review, the audit committee will only approve or ratify transactions that are
fair to the Company and not inconsistent with the best interests of the Company and its stockholders.
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committee has been or will be one of the Company's officers or employees. The Company does not
have any interlocking relationships between its executive officers and the compensation committee and the executive officers and compensation committee of any other entities, nor has any such
interlocking relationship existed in the past.
19
Table of Contents
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, and persons who own more
than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To
our knowledge, based solely on a review of the copies of such reports furnished to us and representations that no other reports were required, during fiscal year 2009, all of our
officers, directors and greater than ten percent beneficial owners timely complied with all Section 16(a) filing requirements.
COMPENSATION DISCUSSION AND ANALYSIS
Overview of Executive Compensation Philosophy
In this Compensation Discussion and Analysis (CD&A), we discuss our compensation philosophy and goals, and the material elements of the
compensation program for our executive officers. This includes the named executive officers identified in the Summary Compensation Table below, for which the compensation committee of the Company's
board of directors (compensation committee) is responsible. We also discuss the particular compensation decisions for our executive officers for 2009, and changes instituted for 2010.
The
compensation committee's specific responsibilities related to executive and director compensation include:
-
-
Developing and recommending to the board of directors an annual performance evaluation of the chief executive officer;
-
-
Setting the compensation of executive officers, including salaries and short and long-term incentive
compensation programs;
-
-
Adopting and modifying equity, health and retirement benefit plans for employees;
-
-
Administering our short-term cash incentive and equity-based incentive compensation programs; and
-
-
Setting the compensation programs for service on the board of directors or its committees.
Our
compensation committee and management believe that our compensation objectives should be balanced to incent and reward our employees for sustainable, long-term
performance that reflects both top-line growth in sales and guest counts, and for the establishment of solid business foundations that improve and support growth and profitability. Our
compensation objectives revolve around attracting, retaining and motivating the best possible executive talent by linking annual and long-term cash and equity incentives to achievement of
measurable corporate and individual performance objectives while minimizing unreasonable and excessive risk-taking, thereby creating value for our stockholders. To achieve these
objectives, we utilize a mix of short-term and long-term compensation strategies that place a significant portion of cash and equity compensation at risk. Accordingly,
management's base salaries are generally at or below the median of the comparable market, and annual cash bonuses provide executives with an opportunity to increase total cash compensation. Cash
bonuses are tied to company-wide goals that are intended to achieve improvement in financial performance, and to achievement of individualized personal goals that align with Company goals.
Finally, a significant portion of each executive's compensation is based on long-term performance awards that include stock options and other equity that vests over multi-year
periods and, in some cases, have performance-based vesting. Our equity ownership guidelines confirm the long-term nature of our equity grants.
20
Table of Contents
The
compensation committee continually evaluates and revises, as necessary, our compensation program to ensure that it is comparable to or competitive with the market, and also promotes
achievement of our business objectives. The compensation committee monitors external or unusual factors that may impact the effectiveness of each compensatory element of our program. In March 2010,
the compensation committee reviewed the Company's compensation policies and practices for all employees, including executive officers. Because a material part of executive management's compensation is
tied to achievement of long-term goals, the compensation committee
believes our compensation programs will not create incentives to take risks that are reasonably likely to have a material adverse effect on the Company.
The
chief executive officer's compensation is determined solely by the compensation committee. Compensation for the other executive officers is approved by the compensation committee
based significantly on the recommendations of our chief executive officer, Dennis B. Mullen and with the advice of our compensation consultant. For individual compensation, the compensation committee
considers both objective factors, such as a periodic review of market data for compensation of executives in the restaurant industry, and subjective factors, including individual experience,
performance and job responsibilities. Certain elements of our executive officer compensation philosophy are included in the compensation philosophy relating to our non-executive employees,
including non-executive officers, regional management and non-restaurant level employees of the Company, whose particular compensation is determined by management. These
elements include a mix of cash and equity, and a varying balance between personal goals and Company performance targets, based on position in the Company.
Compensation Consultant and Benchmarking
The compensation committee has retained Frederic W. Cook & Co. (Cook), a compensation consulting firm, for several years
as its outside advisor. The compensation committee uses Cook to provide market information on compensation and related governance trends, to annually review our executive compensation program and
broad-based equity compensation practices and to assist in ongoing development of our executive compensation philosophy. Cook confers with compensation committee members and senior management about
our business operations and strategy, key performance metrics and targets, and the markets in which we compete. Cook then develops proposals for executive compensation programs based on the market,
including a review of our peer group restaurants, as described below, and Company information, which are considered by the compensation committee in its deliberations. Cook also acts as an advisor to
the compensation committee on compensation matters as they arise, including for example, change of control agreements and compensation for newly hired executives. Other than its service to the
compensation committee, Cook does not provide any services to the Company as the compensation committee believes that the committee and the Company's management should not use the same advisors.
Cook
has assisted the compensation committee with developing a competitive peer group of publicly-traded U.S.-based restaurant companies of generally similar scope, business model,
revenue and market cap size, and which compete with Red Robin in the casual dining segment of the dining industry, and that operate with similar metrics, markets and challenges (Peer Restaurants). We
use the Peer Restaurants for comparing compensation programs and levels and for analysis of competitive performance. Cook periodically reviews the competitive market, and provides suggestions for
updating the Peer Restaurants. In setting 2009 compensation, the compensation committee considered Cook's 2008 review of executive compensation with respect to the Peer Restaurants, which was prepared
at the request of the compensation committee. The companies used as Peer Restaurants in the 2009 review were: BJ's Restaurants, Inc., Brinker International, Inc., Buffalo Wild
Wings, Inc., California Pizza Kitchen, Inc, The Cheesecake Factory, Inc., Chipotle Mexican Grill, Inc., Landry's Restaurants, Inc., O'Charleys, Inc.,
McCormick & Schmick's Seafood Restaurants, Inc., Morton's Restaurant Group Inc.,
21
Table of Contents
Panera
Bread Company, P.F. Chang China Bistro, Inc., Ruby Tuesday, Inc., Ruth's Hospitality Group, Inc. and Texas Roadhouse, Inc.
With
respect to 2010 compensation, Cook recommended changes to the Peer Restaurants based on a review of comparability of revenue and market cap, compensation models, competition for
labor and investment and similarity of business model. The committee considered the recommendations of Cook in addition to other factors, and slightly modified the Peer Restaurants group to include 14
restaurants which were the same as the 2009 group except that the committee added CEC Entertainment, Inc., and Denny's, and removed Ruth's Hospitality Group, Inc., McCormick &
Schmick's Seafood Restaurants, Inc., and Morton's Restaurant Group, Inc. due their market cap size, which was below the range utilized for peer selection.
Recent Compensation Activity
In mid-2009, the compensation committee together with management undertook a review of the Company's compensation practices
in view of legislative activity and proposals surrounding corporate governance and executive compensation, and after considering feedback that management received from our stockholders, specifically
with respect to the stock option tender offer conducted in early 2009. In August 2009, the compensation committee asked Cook to conduct its annual executive compensation study, which included a
comparison of our practices to those of the industry and our peers, and to provide support to the Company's review of best practices, regulatory and legislative recommendations and other pending
activity in the executive compensation arena. Following review of the results of Cook's studies and recommendations in October 2009, and in connection with its planning for 2010 compensation, in late
2009 and early 2010 the committee took several actions to improve the pay-for-performance orientation of the Company's executive compensation program, as well as to modify
specific elements of the compensation program and processes. These actions are summarized below for executive management
in general, and with respect to Mr. Mullen's compensation, and are described in more detail under "Elements of our Executive Compensation Program".
Summary of 2009 Compensation Activity
Base Salaries.
No salary increases were granted to any executive for 2009, except that Susan Lintonsmith, the Company's Chief Marketing
Officer, was
granted a raise in the fall of 2009 from $285,000 to $315,000 because she assumed additional new duties leading the organization's strategic planning function and overseeing the research and
development department.
2009 Bonus Targets.
For 2009, each named executive (other than Mr. Mullen, whose eligibility is described below) was eligible to,
and did
receive, up to 50% of such executive's target bonus for achievement of personal goals. The Company did not achieve its 2009 EBITDA objectives, and consequently, no bonuses were paid on the EBITDA
portion of the bonus plan.
Stock Ownership Guidelines.
In March 2009, the compensation committee approved stock ownership guidelines for executive officers and
directors.
2009 Tender Offer.
In February 2009, we completed an offer to purchase options for shares of our common stock held by certain eligible
employees,
including our executive officers. The tender offer was initially approved by the board of directors in 2008. The Company paid an aggregate of approximately $3.5 million in cash to acquire all
of the options.
Summary of 2010 Compensation Activity
Changes to CEO Compensation.
In January 2010, Mr. Mullen's employment agreement was modified to provide for an increase in base
salary from
$725,000 to $800,000, while eliminating
22
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payment
and reimbursement for personal commuting expenses and related tax gross-ups. The modification also eliminated the tax gross-up on a
change-in-control severance payment and added a cutback provision that may reduce any change-in-control severance to an amount that will not trigger any
applicable excise tax. As part of the amendment and upon the request of the compensation committee, to which he agreed, Mr. Mullen waived his right to receive a bonus equal to 50% of his salary
in 2010, 2011, and 2012, and instead he will participate in future performance bonus plans on the same terms as the other named officers. In addition, Mr. Mullen's equity grants for 2010 are
100% performance based and calculated on total shareholder return.
Base Salaries.
The compensation committee did not approve salary increases for the named executive officers for 2010, except as
described above
following modification of Mr. Mullen's employment agreement.
2010 Bonus Targets.
For 2010, the Company's performance focus will be more heavily weighted toward activities designed to develop
sustainable
increases in sales, guest counts and profitability. The compensation committee approved a cash bonus incentive program for executive officers that is 90% based on achievement of Company EBITDA goals
and 10% based on personal goals as compared to 50% EBITDA and 50% personal goals in 2009.
Long-term Incentive Program.
Equity grants to executives made in 2010 consisted of a mix of time-based restricted stock units
and performance-based restricted stock units (RSUs) based on total shareholder return (TSR). The performance-based RSUs have a three-year performance period with cliff vesting at the end
of such period and the value
of the grant will range from 0% up to 225% of the base grant amount, depending on performance against a peer group of 42 restaurants (based on the same eight digit GICS code for restaurants as the
Company). Option grants have been eliminated in 2010 and replaced with RSUs, which includes RSUs based on TSR as part of the compensation committee's increased emphasis on pay for performance.
Prohibition on Repricing.
In March 2010, the board of directors amended the Amended and Restated 2007 Performance Incentive Plan to
specifically
prohibit certain actions that may be construed as option repricing, including cash tender offers or other exchange of equity for underwater options, without the approval of stockholders.
Tally Sheets.
Beginning in 2010, the compensation committee has added to its processes a review of executive officers' "tally sheets,"
which
summarize each officer's direct compensation, benefits and perquisites, equity value under various scenarios, and the Company's potential severance for terminating the named officers employment. The
tally sheets assist the compensation committee by providing greater visibility to not only total compensation for each officer, but also sensitivity of compensation to performance, interaction of
various elements and kinds of compensation and other relevant data measures.
Elements of our Executive Compensation Program
Cash Compensation
Total cash compensation for executive officers is intended to consist of base salary and annual cash bonus incentive and is generally
targeted at the median of our peer groups.
Base Salary.
Salaries for our executives, including the named executive officers, are provided as a base level cash payment to
recognize the scope of
each executive's responsibilities, experience, and performance. Base salaries are set at or below the median of the market with the upside potential based on bonus opportunity. In October 2009, Cook
provided the compensation committee with a comprehensive review of the Company's compensation structure using reported data for the 2009 Peer Restaurants. Cook's report indicated that all executive
base salaries were at or below the median of the
23
Table of Contents
2009
Peer Restaurants, a change from the October 2008 competitive review, which indicated that Mr. Mullen's and Mr. Brighton's salaries were above the median. Following
Mr. Mullen's 2010 salary adjustment, his salary is between the median and the 75
th
percentile of the 2010 Cook data and Mr. Brighton's is at median.
Base
salaries are reviewed annually, and are adjusted from time to time to realign salaries with market levels after taking into account principally the criteria set forth above and
other factors that may be applicable. Generally, the compensation committee considers Mr. Mullen's evaluation of each executive's performance and growth potential and reviews each executive's
salary in relation to the Cook data for a range or benchmark for salary increases or adjustments at particular levels. Taking into account the macroeconomic environment facing the Company at the
beginning of 2009, management made a number of decisions to drive efficiencies and cost savings throughout the Company, including freezing salaries for all executives. Accordingly, in 2009, and again
in 2010, Mr. Mullen did not recommend, and the compensation committee did not approve, increases in base salary for any of the named executive officers except for Susan Lintonsmith, Chief
Marketing Officer, who received an increase in late 2009 related to assumption of additional duties, as described above.
Other
than Mr. Mullen, our chief executive officer, none of our named executive officers has an employment agreement. In connection with a modification to Mr. Mullen's
employment agreement, in January 2010, his base salary was increased for 2010 from $725,000 to $800,000 and certain other benefits were eliminated. See pages 25 and 33 for further discussion of
Mr. Mullen's agreement.
We
offer to our named executive officers and certain others the option to defer all or a portion of their base salaries under the Company's Deferred Compensation Plan, discussed below.
Annual Performance-Based Incentive (Cash Bonus).
The board of directors annually approves the Company's business plan, which includes a
number of
performance objectives. The purpose of the annual incentive bonus plan is to reward achievement of short-term operating goals and financial performance that incrementally support
long-term, sustained creation of stockholder value. The cash bonus incentive program links both Company and individual performance
to eligibility for bonus payouts. The compensation committee generally reviews and establishes the range of annual bonus opportunities for all employees in January or February of each year, based upon
the approved budget and performance objectives for the Company. Each of our executives, including the named executive officers, is eligible to receive a cash bonus based on achievement of certain
performance objectives. The performance objectives are: (1) achievement by the Company of a sliding scale of minimum, target and maximum defined EBITDA objectives and (2) attainment of
individual performance goals set each year. For our executives for 2010, the bonus opportunity is weighted primarily more toward achievement of the Company's performance objectives (90%), and less
toward the executive's personal goals (10%).
The
EBITDA measure was selected because we believe it is a generally accurate view of the operating results for our restaurants without reflecting the impact of decisions related to our
growth, non-operating factors and other matters. The EBITDA objectives and potential bonus percentages are formulated by management and submitted annually to the compensation committee for
review and approval. While the EBITDA objectives are not modified once established, the compensation committee may adjust EBITDA results for non-cash, non-recurring or unusual
items in the committee's discretion. In addition, the compensation committee may grant special bonuses on an individual or group basis in recognition of extraordinary achievements or to address other
special situations, and may also reduce bonus amounts if pre-established personal goals are not met. The compensation committee generally reviews and establishes the range of annual bonus
opportunities for executive officers in January or February of each year, based upon the approved budget and performance objectives for the Company. Awards for the named executive officers are
approved by the compensation committee based in part on the recommendation of the chief executive officer. Mr. Mullen's annual incentive bonus is approved solely by the compensation committee.
EBITDA-based bonuses are paid pursuant to the Company's Amended and Restated 2007 Performance Incentive Plan (the 2007 Plan). Receipt of the bonus awards may also be deferred under our Deferred
Compensation Plan.
24
Table of Contents
2009 Bonuses.
For 2009, the board approved performance objectives for the executive officers that were focused on achievement of
certain levels of
EBITDA set at thresholds that would indicate varying degrees of operational and financial success, as well as establishing corporate-level objectives, primarily growth and profitability, that provided
the direction for the executive's personal goals. These corporate-level objectives were focused on increases in guest count, revenue, performance of new restaurants, and continuing to build a scalable
infrastructure for the future. Payout of executive individual cash bonus opportunities is bifurcated based on achievement by the Company of the EBITDA objectives and on achievement by the individual
executive of such executive's personal goals. Each named executive (other than Mr. Mullen, whose eligibility is described below) was eligible to receive up to 50% of such executive's target
bonus for achievement of personal goals. The rationale for using a 50/50 mix of individual objectives and corporate EBITDA in 2009 was to recognize that improving the Company's financial results would
require both profitable operations (EBITDA) and attainment of non-financial performance (pre-established personal goals) that would be critical to creating shareholder value.
The board of directors reviews the performance of the Company and the performance of the executives against their goals to determine whether to approve bonus payouts.
For
2009, our target level EBITDA objective was approximately $104.5 million before giving effect to bonus payments. The range of EBITDA objectives was approximately 95% below
target for the minimum threshold level, and approximately 105% above target for the maximum level. Our actual EBITDA for 2009 fell below the minimum threshold level. Consequently, no EBITDA-based
bonuses were paid to any of the named executive officers in fiscal year 2009, or to any of the Company's
otherwise eligible employees, including certain other executives, regional management, and non-restaurant personnel.
In
fiscal 2009, the Company did achieve several operational and profitability objectives. Each named executive's 2009 personal goals shared one or more common components in alignment
with these Company objectives, and accordingly each named executive officer earned a bonus payout on achievement of certain of these goals. Many of these objectives continued the Company's focus,
begun in prior years, on initiatives designed to provide long-term improvement in the Company's operations, including improving new restaurant operations, reducing pre- and
post-opening costs, controlling labor costs, implementing guest satisfaction strategies, reducing restaurant development costs, and improving financial strength, among others. For 2009,
the named executive officers were awarded bonuses for satisfaction of these objectives in the amounts reflected in the Summary Compensation Table. The 2009 achievements included, among other
things:
-
-
Opened 15 new company-owned restaurants funded by our operating cash flow;
-
-
A
chieved increases for new restaurants in restaurant-level performance metrics
utilized by the Company;
-
-
Instituted on-going tracking of guest satisfaction survey; achieved guest overall satisfaction ratings above
the industry benchmark (70% vs. 51%);
-
-
Expanded third-party gift card sales by more than 28% to sales of $4.9 million;
-
-
Paid down debt from free cash flow from the 2008 fiscal year end balance of $222.6 million to $191.3 at fiscal
2009 year end;
-
-
Reduced investment in new restaurants from $2.45 million per restaurant in 2006 to $2.1 million per
restaurant in 2009; and
-
-
Successfully implemented a project to streamline or reduce the number of products in restaurant inventories required to
produce our menu items.
Under
the employment agreement with Mr. Mullen, he was eligible to receive a cash bonus of 50% of his base salary for each of the years ended December 31, 2009, 2010, 2011
and 2012 upon
25
Table of Contents
achievement
of earnings per share of at least $0.50 for the 2009 fiscal year. Mr. Mullen received the bonus payout for 2009 based on the Company's earnings of $1.14 per share for 2009, but as
further described below, at the request of the compensation committee, Mr. Mullen agreed to waive this bonus eligibility for 2010, 2011 and 2012. His bonus eligibility in 2010 will be based
solely on his participation in the Company's annual bonus incentive program.
The
table below illustrates the range of 2009 bonus eligibility had the EBITDA targets been achieved in addition to the named executive officer's personal goals. Achievement of personal
goals alone triggered eligibility for a maximum bonus payout up to the percentage of the executive's salary set forth under the "Personal Goals" column, which represents 50% of the bonus achievable
with the Target-level EBITDA-based bonus. The payouts are reported in the Summary Compensation Table.
The
percentages set forth below are percentages of the applicable named executive's salary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA-Based Bonus
|
|
|
|
|
|
|
|
2009
Annual
Base Salary
|
|
Personal
Goals
Bonus
|
|
Minimum
Guaranteed
Bonus
|
|
Named Executive Officer
|
|
Min/Min
|
|
Minimum
|
|
Target
|
|
Maximum
|
|
D. Mullen
|
|
|
725,000
|
|
|
0
|
%
|
|
27.5
|
%
|
|
45.0
|
%
|
|
67.5
|
%
|
|
45.0
|
%
|
$
|
362,500
|
(1)
|
K. Scherping
|
|
|
285,000
|
|
|
0
|
%
|
|
17.5
|
%
|
|
35.0
|
%
|
|
52.5
|
%
|
|
35.0
|
%
|
|
N/A
|
|
E. Houseman
|
|
|
400,000
|
|
|
0
|
%
|
|
20.0
|
%
|
|
40.0
|
%
|
|
60.0
|
%
|
|
40.0
|
%
|
|
N/A
|
|
T. Brighton
|
|
|
295,000
|
|
|
0
|
%
|
|
17.5
|
%
|
|
35.0
|
%
|
|
52.5
|
%
|
|
35.0
|
%
|
|
N/A
|
|
S. Lintonsmith
|
|
|
285,000
|
(2)
|
|
0
|
%
|
|
17.5
|
%
|
|
35.0
|
%
|
|
52.5
|
%
|
|
35.0
|
%
|
|
N/A
|
|
-
(1)
-
As
in effect at the end of 2009, Mr. Mullen's employment agreement provided that he was entitled to an annual incentive bonus for each of the fiscal
years 2009 through 2012 of not less than fifty percent (50%) of his annual base salary for the applicable fiscal year, as long as certain performance metrics were achieved for the year ended
December 31, 2009. Although such metrics were satisfied for the year ended December 31, 2009, at the compensation committee's request, Mr. Mullen agreed to waive this bonus amount
for 2010, 2011 and 2012. Accordingly, Mr. Mullen's employment agreement was amended in January 2010 to provide that Mr. Mullen's bonus eligibility in 2010, 2011 and 2012 will be based
solely on his participation in the Company's annual incentive program upon the same terms as other officers.
-
(2)
-
Ms. Lintonsmith
received a salary increase to $315,000 in August 2009.
2010 Bonus Targets.
For fiscal 2010, the Company considered several factors when revising the 2010 bonus structure, including the
Company's
performance, Cook's compensation report, legislative and regulatory proposals and shareholder feedback. As the Company's 2010 focus is directed to growing revenue and guest counts, the Company
concluded that there was a need for a greater focus on objective, Company performance-based incentive compensation for the Company's executives. As a result, the compensation committee approved not
only a cash bonus incentive program that weighs more heavily toward achievement of Company targets, but also approved performance-based equity grants based on total shareholder return.
For
2010, the Company's performance focus will be more heavily weighted toward activities designed to develop sustainable increases in sales and guest counts. Accordingly, the
compensation committee approved a cash bonus incentive program that weighs more heavily toward achievement of Company goals, with 90% of the bonus dependent on achievement of Company EBITDA targets.
The remaining 10% is based on achievement of personal goals. Personal goals are aligned with achieving Company revenue, guest count target and other growth objectives.
The
table below illustrates bonus eligibility based on potential 2010 results for both the EBITDA-based bonus and the personal goals bonus. Achievement of personal goals will trigger
eligibility for a bonus payout up to 10% of the target level bonus for the named executive officers, in addition to any
26
Table of Contents
EBITDA-based
bonus that may be earned. The percentages set forth below are percentages of the applicable named executive's salary:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA-Based Bonus
|
|
|
|
|
|
2010
Annual
Base Salary
|
|
Personal
Goals
Bonus
|
|
Named Executive Officer
|
|
Minimum
|
|
Target
|
|
Maximum
|
|
D. Mullen
|
|
|
800,000
|
|
|
45.0
|
%
|
|
90.0
|
%
|
|
135.0
|
%
|
|
10.0
|
%
|
K. Scherping
|
|
|
285,000
|
|
|
31.5
|
%
|
|
63.0
|
%
|
|
94.5
|
%
|
|
7.0
|
%
|
E. Houseman
|
|
|
400,000
|
|
|
36.0
|
%
|
|
72.0
|
%
|
|
108.0
|
%
|
|
8.0
|
%
|
T. Brighton
|
|
|
295,000
|
|
|
31.5
|
%
|
|
63.0
|
%
|
|
94.5
|
%
|
|
7.0
|
%
|
S. Lintonsmith
|
|
|
315,000
|
|
|
31.5
|
%
|
|
63.0
|
%
|
|
94.5
|
%
|
|
7.0
|
%
|
-
(1)
-
No
EBITDA-based bonus is payable if EBITDA falls below the Minimum threshold.
Long-Term Incentive Program
We believe that equity-based compensation is a significant component of executive compensation that aligns executives with
long-term improvement in the Company's performance and stockholder interests. In 2009, we granted to the named executive officers roughly 50% of the long-term award value in
restricted stock units and 50% in options. The Company chose this weighting to align executives with stockholders by supporting growth, employment retention, and growing stockholder value. The
Company's view for 2009 was that option grants provide a performance-based reward because they are only valuable if the stock price increases after grant. In addition, the Company views restricted
stock units as aligning executives with stockholders if the price goes up or down, while supporting employment retention. Restricted stock units are also viewed as creating less dilution overhang than
options. Aside from the ownership guideline described below, the Company does not have a policy requiring vested RSU shares, vested options, or shares acquired following option exercise to be retained
by the named executive officers.
Awards
of non-qualified stock options are generally granted in February, three business days following the release of our annual earnings results, so that the market has a
chance to incorporate all of the disclosed performance data into the stock price. The grant price is the market price of a share of the Company's common stock at the close of market on the date of
grant. The compensation committee determines the annual grants for the executive officers, including the named executive officers, pursuant to market data and with respect to comparisons to Peer
Restaurant compensation practices. The 2009 annual grants were generally consistent with the market-cap size-adjusted median for the Peer Restaurants at the time of grant when
combined with the restricted stock unit awards discussed below.
Together
with options, we use restricted stock and restricted stock units as additional components of our equity incentive plan. The compensation committee believes that a mix of
restricted stock and/or restricted stock units and options provides an element of guaranteed equity ownership but also maintains an element of performance risk for executives, as the value of the
restricted stock and restricted stock unit grants is tied to stock price performance.
2010 Equity Grants.
Consistent with the Company's philosophy of incenting long-term Company performance, in February 2010, the Company
made its annual equity grants to our named executive officers, in the form of time-based and performance-based restricted stock units granted under the 2007 Plan. The purpose of this
change from 2009 was to increase the performance orientation of the program and ensure that more than 50% of named executive officer equity awards were performance
27
Table of Contents
based,
which the Company believes is best practice. The named executive officers were granted the following awards:
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Performance-
based
Restricted
Stock Units
|
|
Time-based
Restricted
Stock Units
|
|
D. Mullen
|
|
|
13,900
|
|
|
|
|
K. Scherping
|
|
|
3,300
|
|
|
2,700
|
|
E. Houseman
|
|
|
6,700
|
|
|
5,300
|
|
T. Brighton
|
|
|
3,300
|
|
|
2,700
|
|
S. Lintonsmith
|
|
|
3,300
|
|
|
2,700
|
|
The
time-based restricted stock units vest in four equal installments on each of the first four anniversaries of the date of grant so long as the executive is employed or
otherwise providing services to the Company on each vesting date. The performance-based restricted stock units are based on the Company's relative Total Shareholder Return ranking versus a defined
group of 42 similarly-sized restaurant chains over a three-year performance period ("TSR RSU"). The reason for this design was to objectively align executive officers' equity incentive
rewards with long-term shareholder returns. The total shareholder return measure ensures that participants are compensated when the return to our stockholders exceeds that of these peer
group companies, since a simple stock price growth measure may reward increases in the Company's stock price due to improvements in general economic conditions that are experienced by all companies in
the peer group. No awards vest until the performance period is complete (excluding exceptions related to death, disability and change-in-control), and the number of shares that
vest under all termination scenarios is related to actual relative TSR performance versus the comparison set. The number of TSR RSUs earned on the last day of the three-year performance
period will be determined as follows:
|
|
|
|
|
3-year TSR vs.
Peer Group
|
|
% Target Shares
Earned
|
|
£
25
th
Percentile
|
|
|
0%
|
|
37.5 Percentile
|
|
|
50%
|
|
50
th
Percentile
|
|
|
100%
|
|
60
th
Percentile
|
|
|
140%
|
|
70
th
Percentile
|
|
|
180%
|
|
75
th
Percentile
|
|
|
200%
|
|
³
90
th
Percentile
|
|
|
225%
|
|
Stock Ownership Guidelines.
In March 2009, the compensation committee approved stock ownership guidelines for executive officers and
directors (see
page 45 for the ownership guidelines for directors). The compensation committee utilized the services of Cook to review the competitive landscape for executive and director ownership guidelines
and provide suggested structures. The compensation committee believes that executive ownership requirements increase alignment with stockholders on long-term ownership risk. For
executives, the guidelines require holding a definitive dollar amount of stock based on the value of the stock at the date of acquisition, during the term of the executive's employment. The value is
based broadly on a multiple of salary for each executive officer, scaled upward to account for assumed salary increases over time. The executive officers have five years to achieve the guidelines. The
ownership values, based on 2009 salaries, are approximately four times Mr. Mullen's salary, approximately two times Mr. Houseman's salary and approximately 1.5 times salary for the
remaining executive officers, whose guidelines are the same, given that historically
28
Table of Contents
other
equity grants have been equal among them. The following table illustrates the ownership guidelines and the acquisition value of the named executive officers' holdings as of March 31,
2010:
|
|
|
|
|
|
|
|
Named Executive Officer
|
|
Ownership
Guideline(1)
|
|
Value
|
|
D. Mullen
|
|
$
|
3,000,000
|
|
$
|
6,533,005
|
|
K. Scherping
|
|
$
|
450,000
|
|
$
|
439,286
|
|
E. Houseman
|
|
$
|
800,000
|
|
$
|
691,332
|
|
T. Brighton
|
|
$
|
450,000
|
|
$
|
431,974
|
|
S. Lintonsmith
|
|
$
|
450,000
|
|
$
|
295,426
|
|
-
(1)
-
To
be achieved by March 2014.
Stock Option Tender Offer
In February 2009, we completed an offer to purchase certain outstanding options exercisable for shares of our common stock held by
certain eligible employees, including the named executive officers, which had initially been approved by the board of directors in 2008. The eligible options were those outstanding as of
January 13, 2009, that were granted under certain of our incentive plans, with an exercise price equal to or greater than $32.00 per share. Pursuant to the offer, the Company accepted elections
by eligible employees to tender 1,576,306 options, representing 96.32% of the options that were eligible to be tendered in the offer. 484,800 of the eligible options accepted for tender in the offer
were originally issued under the 2007 Plan and will be available for future issuance under such plan. The Company paid an aggregate of $3,497,696 to acquire options that were held by the eligible
employees participating in the offer. The named executive officers received aggregate net proceeds of $663,052, a significant portion of which, $570,069, was used by such officers to acquire shares of
the Company's common stock.
|
|
|
|
|
Named Executive Officer
|
|
Proceeds Used
for Share
Acquisition(1)
|
|
D. Mullen
|
|
$
|
251,226
|
|
K. Scherping
|
|
$
|
84,345
|
|
E. Houseman
|
|
$
|
133,143
|
|
T. Brighton
|
|
$
|
66,580
|
|
S. Lintonsmith
|
|
$
|
34,775
|
|
-
(1)
-
The
amount of $570,069 does not total the aggregate net proceeds because a portion of the net proceeds were used by certain of the named executive officers
to pay taxes, commissions or other costs associated with the acquisition of the shares.
When
considering the tender offer in 2008, the board of directors concluded, after a comprehensive review of our current compensation program and the impact of the decline in our common
stock price on our incentive awards, that the tender offer was consistent with restoring the incentive value of our long-term performance award programs to all employees who receive equity
incentives. The sharp decline in the market price of our common stock from the beginning of 2008 through the tender offer significantly eroded the value of a substantial number of outstanding options
held by our employees, as the exercise price of those options far exceeded the market price of our common stock. Unfortunately, that decline in our stock price substantially eliminated the incentive
and retention value of the options granted to our employees, including our key members of management. Moreover, the board of directors also did not believe that the market price for our stock
reflected accurately the achievements of management over the past few years when the options were issued, as reflected in metrics other than stock price, for example, in our growth in revenue,
restaurant units and
29
Table of Contents
earnings.
Future compensation expense associated with the unvested options that were tendered has been eliminated. Further, the cancellation of the outstanding options reduced market overhang to
stockholders, thereby reducing potential dilution.
The
Company received criticism from certain of its stockholders for completing the tender offer without stockholder approval. Accordingly, in February 2010 and in consideration together
with other corporate governance actions, the Company adopted an amendment to our Amended and Restated 2007 Performance Incentive Plan to prohibit any similar future activity with respect to options
under the Plan that may be considered repricing without stockholder approval. This amendment includes a prohibition against the cancellation of any option in exchange for cash, restricted stock or any
other award.
Changes to CEO Compensation
On January 11, 2010, the Company entered into a letter agreement with our chief executive officer, Dennis B. Mullen (the
Amendment), which modified certain provisions of Mr. Mullen's Second Amended and Restated Employment Agreement dated March 10, 2008, as previously amended August 15, 2008 (the
Existing Agreement). The compensation committee undertook a review of the Existing Agreement in connection with its annual review of executive compensation that commenced in October 2009.
Under
the Existing Agreement, Mr. Mullen was eligible to receive a cash bonus for each of the years ended December 31, 2009, 2010, 2011 and 2012 of not less than
fifty-percent (50%) of his annual base salary if certain performance metrics determined by the compensation committee for the year ended December 31, 2009 were met. Although the metrics were
satisfied for the year ended December 31, 2009, at the request of the compensation committee, Mr. Mullen agreed to waive this bonus amount for 2010, 2011 and 2012. The Amendment provides
that Mr. Mullen's bonus eligibility in 2010, 2011 and
2012 will be based solely on his participation in the Company's annual incentive plan. In connection with the Amendment, the compensation committee determined that Mr. Mullen's 2010 annual
incentive bonus target will be 100% of his base salary, increased from 90% in 2009.
The
Amendment increased Mr. Mullen's annual base salary from $725,000 to $800,000 for 2010. In addition, the Amendment terminated Mr. Mullen's right to be paid or
reimbursed for personal travel expenses incurred by Mr. Mullen in commuting between Arizona and Colorado, as well as the tax gross-up related to such payments. The Amendment also
deleted the 280G tax gross-up provision set forth in the Existing Agreement, so that in the event that Mr. Mullen would be required to pay any excise tax imposed by Internal Revenue
Code Section 4999, the Company no longer has an obligation to pay Mr. Mullen such amounts. The Amendment replaced the tax gross-up provision with a cutback provision, so that
compensation payable to Mr. Mullen that would otherwise trigger the excise tax imposed by Internal Revenue Code Section 4999 may be reduced up to a defined amount so as not to trigger
such tax.
Change in Control Arrangements
During its review of the executive compensation program in 2008, the compensation committee discussed the business environment in the
restaurant industry, noting a trend to consolidation or acquisition of restaurants in going private transactions. The compensation committee's philosophy in considering change of control agreements
was its belief that the best interests of the Company are supported when management can continue to perform and consider business combination transactions without distraction of personal employment
considerations. Cook, our compensation adviser, evaluated other compensation arrangements and indicated that almost all of the Peer Restaurants include change in control agreements as part of their
executive compensation. The compensation committee also believed it served the best interest of the Company to consider and evaluate implementing these
30
Table of Contents
arrangements
outside of any pending transactions. Accordingly, in 2008, the Company entered into change in control agreements with each of the named executive officers (other than Mr. Mullen
whose employment agreement includes change in control provisions).
See the description of Mr. Mullen's Employment Agreement and the Change in Control
Agreements.
Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Code under the Omnibus Budget Reconciliation Act of 1993 limits the deductibility for tax
purposes of compensation over $1 million paid by a company to an executive officer. The policy of the compensation committee is to establish and maintain a compensation program that maximizes
the creation of long-term stockholder value. The compensation committee attempts to generally structure most compensation approaches to ensure deductibility. The compensation committee,
however, reserves the right to adopt programs giving consideration to factors other than deductibility where the compensation committee believes stockholder interests are best served by retaining
flexibility. In such cases, the compensation committee may consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent reasonably practicable and
to the extent consistent with its compensation objectives.
As
discussed above, performance bonuses are generally paid under the 2007 Plan and thus, are intended to qualify as "performance-based compensation" under Section 162(m) of the
Internal Revenue Code. Accordingly, such amounts are deductible by the Company even if in excess of the $1 million statutory limit. Certain of our annual equity awards to our executives are not
performance-based. Consequently, a portion of that compensation may not be deductible in future years if such executive's aggregate compensation is in excess of statutory limits.
Compensation Committee Report
The following Report of the compensation committee does not constitute soliciting material and should not be
deemed filed or incorporated by reference into any other Company filing under the Securities Act of 1933 or the Securities Act of 1934, except to the extent the Company specifically incorporates this
Report.
The
compensation committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion and Analysis with the Company's management. Based on the review
and discussions, the compensation committee recommended to the Company's board of directors that the Compensation Discussion and Analysis be included in this proxy statement.
THE
COMPENSATION COMMITTEE
Pattye
L. Moore, Chair
Lloyd L. Hill*
James T. Rothe
Gary J. Singer
-
*
-
Mr. Hill
joined the compensation committee in March 2010.
31
Table of Contents
2009 Executive Compensation Tables
Summary Compensation Table
The following table sets forth summary information concerning compensation awarded to, earned by, or accrued for services rendered to
the Company in all capacities by our principal executive officer, principal financial officer, and each of our three other most highly compensated executive officers who were serving as executive
officers at the end of fiscal year 2009 (collectively, the named executive officers), for fiscal years 2007 through 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)(1)
|
|
Bonus
($)(2)
|
|
Stock
Awards
($)(3)
|
|
Option
Awards
($)(4)
|
|
Non-Equity
Incentive Plan
Compensation
($)(5)
|
|
All Other
Compensation
($)(6)
|
|
Total
($)
|
|
Dennis B. Mullen,
|
|
|
2009
|
|
|
725,000
|
|
|
|
|
|
111,975
|
|
|
126,218
|
|
|
362,500
|
|
|
543,415
|
|
|
1,869,108
|
|
|
Chief Executive Officer
|
|
|
2008
|
|
|
725,000
|
|
|
|
|
|
1,693,313
|
|
|
248,843
|
|
|
|
|
|
270,849
|
|
|
2,938,005
|
|
|
|
|
2007
|
|
|
675,000
|
|
|
172,751
|
|
|
4,029,220
|
|
|
569,057
|
|
|
779,335
|
|
|
245,900
|
|
|
6,471,263
|
|
Katherine L. Scherping,
|
|
|
2009
|
|
|
285,000
|
|
|
|
|
|
44,790
|
|
|
50,487
|
|
|
99,750
|
|
|
139,051
|
|
|
619,078
|
|
|
Senior Vice President and Chief
|
|
|
2008
|
|
|
285,000
|
|
|
|
|
|
89,725
|
|
|
99,538
|
|
|
|
|
|
11,550
|
|
|
485,813
|
|
|
Financial Officer
|
|
|
2007
|
|
|
235,000
|
|
|
46,778
|
|
|
|
|
|
284,527
|
|
|
211,030
|
|
|
11,587
|
|
|
788,922
|
|
Eric C. Houseman,
|
|
|
2009
|
|
|
400,000
|
|
|
|
|
|
89,580
|
|
|
100,974
|
|
|
160,000
|
|
|
257,977
|
|
|
1,008,531
|
|
|
President and Chief Operating
|
|
|
2008
|
|
|
400,000
|
|
|
|
|
|
179,450
|
|
|
199,075
|
|
|
|
|
|
14,292
|
|
|
792,817
|
|
|
Officer
|
|
|
2007
|
|
|
325,000
|
|
|
73,935
|
|
|
|
|
|
341,435
|
|
|
333,543
|
|
|
13,230
|
|
|
1,087,143
|
|
Todd Brighton,
|
|
|
2009
|
|
|
295,000
|
|
|
|
|
|
44,790
|
|
|
50,487
|
|
|
103,250
|
|
|
157,232
|
|
|
650,759
|
|
|
Senior Vice President and Chief
|
|
|
2008
|
|
|
295,000
|
|
|
|
|
|
89,725
|
|
|
99,538
|
|
|
|
|
|
14,710
|
|
|
498,973
|
|
|
Development Officer
|
|
|
2007
|
|
|
265,000
|
|
|
52,750
|
|
|
|
|
|
170,716
|
|
|
237,970
|
|
|
13,848
|
|
|
740,284
|
|
Susan Lintonsmith,
|
|
|
2009
|
|
|
295,385
|
|
|
|
|
|
44,790
|
|
|
50,487
|
|
|
103,587
|
|
|
73,756
|
|
|
568,005
|
|
|
Senior Vice President and Chief
|
|
|
2008
|
|
|
285,000
|
|
|
|
|
|
89,725
|
|
|
99,538
|
|
|
|
|
|
13,565
|
|
|
487,828
|
|
|
Marketing Officer
|
|
|
2007
|
|
|
188,558
|
|
|
|
|
|
|
|
|
181,457
|
|
|
228,589
|
|
|
79,060
|
|
|
677,664
|
|
-
(1)
-
Salary
amounts represent base salary and payment for vacation, holidays and sick days. Amounts shown are not reduced to reflect the named executive
officers' elections, if any, to defer receipt of salary into the Deferred Compensation Plan.
-
(2)
-
Amounts
reported in this column for 2007 represent a special bonus paid to the named executive officers in connection with the acquisition of
17 franchise restaurants from a franchisee in 2007. Other amounts considered to be bonus awards were paid to the named executive officers pursuant to the 2004 Plan or 2007 Plan and are reported
in the "Non-Equity Incentive Plan Compensation" column.
-
(3)
-
Amounts
under Stock Awards represent the aggregate grant date fair value of such awards computed in accordance with the authoritative accounting guidance
for accounting for stock compensation for fiscal years 2009, 2008 and 2007. See "Outstanding Equity Awards at 2009 Fiscal Year-End" below for a listing of restricted stock awards
outstanding for each officer as of December 27, 2009.
-
(4)
-
Amounts
under Option Awards represent the aggregate grant date fair value of such awards computed in accordance with the authoritative accounting guidance
for accounting for stock compensation for fiscal years 2009, 2008 and 2007. See Note 16 to our financial statements included in our annual reports on Form 10-K for the fiscal
years ended December 27, 2009, December 28, 2008 and December 30, 2007, for descriptions of the methodologies and assumptions we used to value option awards.
-
(5)
-
The
amount shown for each named executive officer in the "Non-Equity Incentive Plan Compensation" column for 2007 is attributable to a bonus
award under the 2004 Plan earned in fiscal year 2007, but paid in 2008. No bonuses were earned by any named executive officer for fiscal year 2008. The amount shown for each named executive officer in
the "Non-Equity Incentive Plan Compensation" column for 2009 is attributable to a bonus award under the 2007 Plan earned in fiscal year 2009, but paid in 2010.
32
Table of Contents
-
(6)
-
Amounts
in the "All Other Compensation" column consist of the following payments we paid to or on behalf of the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
Car
Allowance
($)(a)
|
|
Meal
Discounts
($)(b)
|
|
Life
Insurance/
LT
Disability
Premium
Payments
($)(c)
|
|
Commuting
&
Other
Expenses
($)
|
|
Housing
($)
|
|
Tax Gross
Up for
Certain
Payments
($)
|
|
Tender
Offer stock
earnings
($)(i)
|
|
Total
($)
|
|
Dennis B. Mullen,
|
|
|
2009
|
|
|
12,461
|
|
|
1,349
|
|
|
10,287
|
|
|
106,768
|
(d)
|
|
|
|
|
75,710
|
(f)
|
|
412,550
|
|
|
543,415
|
|
|
Chief Executive Officer
|
|
|
2008
|
|
|
12,000
|
|
|
299
|
|
|
10,200
|
|
|
145,310
|
(d)
|
|
|
|
|
103,040
|
(f)
|
|
|
|
|
270,849
|
|
|
|
|
2007
|
|
|
12,000
|
|
|
497
|
|
|
4,874
|
|
|
119,886
|
(d)
|
|
10,415
|
(e)
|
|
103,102
|
(f)
|
|
|
|
|
250,774
|
|
Katherine L. Scherping,
|
|
|
2009
|
|
|
10,592
|
|
|
1,236
|
|
|
423
|
|
|
|
|
|
|
|
|
|
|
|
126,800
|
|
|
139,051
|
|
|
Senior Vice President and
|
|
|
2008
|
|
|
10,200
|
|
|
937
|
|
|
413
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,550
|
|
|
Chief Financial Officer
|
|
|
2007
|
|
|
10,015
|
|
|
1,572
|
|
|
331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,918
|
|
Eric C. Houseman,
|
|
|
2009
|
|
|
10,592
|
|
|
3,783
|
|
|
2,252
|
|
|
|
|
|
|
|
|
|
|
|
241,350
|
|
|
257,977
|
|
|
President and Chief
|
|
|
2008
|
|
|
10,200
|
|
|
2,235
|
|
|
1,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,292
|
|
|
Operating Officer
|
|
|
2007
|
|
|
10,200
|
|
|
1,583
|
|
|
1,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,526
|
|
Todd Brighton,
|
|
|
2009
|
|
|
10,592
|
|
|
1,782
|
|
|
2,508
|
|
|
|
|
|
|
|
|
|
|
|
142,350
|
|
|
157,232
|
|
|
Senior Vice President and
|
|
|
2008
|
|
|
10,200
|
|
|
1,626
|
|
|
2,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,710
|
|
|
Chief Development Officer
|
|
|
2007
|
|
|
10,200
|
|
|
1,431
|
|
|
2,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,234
|
|
Susan Lintonsmith,
|
|
|
2009
|
|
|
10,592
|
|
|
3,420
|
|
|
444
|
|
|
|
|
|
|
|
|
|
|
|
59,300
|
|
|
73,756
|
|
|
Senior Vice President and
|
|
|
2008
|
|
|
10,200
|
|
|
3,086
|
|
|
279
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,565
|
|
|
Chief Marketing Officer
|
|
|
2007
|
|
|
6,935
|
|
|
1,662
|
|
|
149
|
|
|
45,000
|
(g)
|
|
|
|
|
25,314
|
(h)
|
|
|
|
|
79,060
|
|
-
(a)
-
All
executives and certain other employees receive monthly car allowances.
-
(b)
-
Meal
discounts are provided to executives and valued based on approximately 59% of the cost of the meal, which represents the average cost of goods and
labor. The amount reflects actual usage (whether for business or personal use) by the named executive officers.
-
(c)
-
Long
term disability insurance and life insurance is provided to certain executives and paid by the Company. The value represents the premiums paid by the
Company on behalf of the named executive officer.
-
(d)
-
Mr. Mullen,
chief executive officer, commuted to his home in Arizona from the Company's headquarters in Denver, Colorado in each of the years
represented. Pursuant to his employment agreement with the Company, the Company agreed to pay or reimburse Mr. Mullen for travel expenses he incurs commuting between Arizona and the Company's
headquarters. However, Mr. Mullen's employment agreement was amended on January 11, 2010, to eliminate, among other things, reimbursement for Mr. Mullen's commuting expenses on a
going forward basis. For 2007, the specified amount also includes $7,195 in attorney's fees for negotiation of Mr. Mullen's amended and restated employment agreement.
-
(e)
-
Pursuant
to Mr. Mullen's agreement, until April 2007, the Company provided Mr. Mullen with use of a furnished apartment in Denver and
reimbursed him for certain utility expenses. These expenses for 2007 were $10,415 which included $9,800 for rent at the rate of $4,900 per month and approximately $614 in utilities and other
miscellaneous expenses.
-
(f)
-
Amounts
represent tax gross ups for taxes on commuting and relocation/housing compensation paid to Mr. Mullen identified in the commuting expenses
and housing columns. This benefit was eliminated in January 2010 in the amendment to Mr. Mullen's employment agreement.
-
(g)
-
This
amount represents relocation expenses paid to Ms. Lintonsmith when she joined the Company.
-
(h)
-
Amounts
represent tax gross ups for taxes paid to Ms. Lintonsmith in connection with a signing bonus she received in 2007.
-
(i)
-
Amounts
represent net proceeds received by each executive in connection with the cash tender offer for stock options consummated in February 2009.
33
Table of Contents
Grants of Plan-Based Awards
The following table provides additional information about stock option awards and equity and targeted non-equity incentive
plan awards granted to our named executive officers during fiscal 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares
Underlying
Stock
(#)(2)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)(3)
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
|
|
Exercise
or
Base Price
of Option
Awards
($)
|
|
Grant Date
Fair Value
of Stock
and Option
Awards
($)(4)
|
|
|
|
|
|
Personal Goals
($)
|
|
Threshold
($)(5)
|
|
Target
($)
|
|
Max
($)
|
|
Dennis B. Mullen,
|
|
|
2/24/2009
|
|
|
362,500
|
|
|
163,125
|
|
|
326,250
|
|
|
489,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
14.93
|
|
|
126,218
|
|
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
|
|
|
|
|
111,975
|
|
Katherine L. Scherping,
|
|
|
2/24/2009
|
|
|
99,750
|
|
|
49,875
|
|
|
99,750
|
|
|
149,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
14.93
|
|
|
50,487
|
|
|
Chief Financial Officer
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
44,790
|
|
Eric C. Houseman,
|
|
|
2/24/2009
|
|
|
160,000
|
|
|
80,000
|
|
|
160,000
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
14.93
|
|
|
100,974
|
|
|
Operating Officer
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
89,580
|
|
Todd Brighton,
|
|
|
2/24/2009
|
|
|
103,250
|
|
|
51,625
|
|
|
103,250
|
|
|
154,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
14.93
|
|
|
50,487
|
|
|
Chief Development Officer
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
44,790
|
|
Susan Lintonsmith,
|
|
|
2/24/2009
|
|
|
103,587
|
|
|
51,625
|
|
|
103,250
|
|
|
154,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
14.93
|
|
|
50,487
|
|
|
Chief Marketing Officer
|
|
|
2/24/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
44,790
|
|
-
(1)
-
Amounts
under "Estimated Future Payouts Under Non-Equity Incentive Plan Awards" reflect potential bonus payouts that depended on satisfaction of
Company EBIDTA targets and personal goals in fiscal 2009. Under his employment agreement, Mr. Mullen received a guaranteed bonus in the amount of $362,500 based on satisfaction of performance
objectives. However, Mr. Mullen waived his right to receive this bonus in the future for 2010, 2011 and 2012 in the January 2010 amendment to his employment agreement. In February 2010, the
compensation committee granted the named executive officers cash bonus awards under the 2007 Plan for achievement of personal goals in 2009, as reflected in the Summary Compensation Table above. The
factors considered by the compensation committee in determining whether each of the executives achieved their personal goals are discussed above in "Compensation Discussion and
AnalysisAnnual Performance-Based Incentive (Bonus)". No payouts were made for EBITDA performance because the Company did not meet its EBITDA targets. The February 24, 2009 data in
column 1 reflects the equity award grant date.
-
(2)
-
The
restricted stock granted on February 24, 2009 was issued pursuant to the 2007 Plan and vests 25% on each anniversary date of issuance over a
four-year period.
-
(3)
-
Options
issued on February 24, 2009 were granted pursuant to the 2007 Plan, and vest 25% on the first anniversary date of issuance and the balance
vest pro-rata on a monthly basis over the following 36-month period. Options are exercisable for ten years from the date of issuance, subject to continuing employment or
service with the Company as defined in the 2007 Plan, and certain other conditions.
-
(4)
-
See
Note 16 to our financial statements included in our annual report on Form 10-K for the fiscal year ended December 27,
2009 for descriptions of the methodologies and assumptions we use to value option awards pursuant to the authoritative guidance for accounting stock compensation.
-
(5)
-
We
also utilized a Minimum/Minimum (Min/Min) target, so that in the event actual EBITDA exceeded the Min/Min target and was less than the Minimum
(Threshold) target, the amount of bonus to which the executive was entitled would have been adjusted on a pro rata basis between the Min/Min and the Minimum (Threshold) amount set forth above.
34
Table of Contents
Outstanding Equity Awards at 2009 Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
|
|
Option
Exercise
Price
($)
|
|
|
|
|
|
Option
Expiration
Date
|
|
Not
Vested
|
|
Market
Value
($)
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Dennis B. Mullen,
|
|
|
|
|
|
20,000
|
|
|
14.93
|
|
|
2/24/19
|
(1)
|
|
50,000
|
(5)
|
|
920,000
|
(9)
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,688
|
(6)
|
|
86,259
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
(7)
|
|
920,000
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
(8)
|
|
138,000
|
(9)
|
Katherine L. Scherping,
|
|
|
|
|
|
8,000
|
|
|
14.93
|
|
|
2/24/19
|
(1)
|
|
1,875
|
(6)
|
|
34,500
|
(9)
|
|
Senior Vice President and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
(8)
|
|
55,200
|
(9)
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric C. Houseman,
|
|
|
12,000
|
|
|
|
|
|
14.98
|
|
|
1/29/13
|
(2)
|
|
3,750
|
(6)
|
|
69,000
|
(9)
|
|
President and Chief Operating
|
|
|
9,000
|
|
|
|
|
|
26.81
|
|
|
1/28/14
|
(3)
|
|
6,000
|
(8)
|
|
110,400
|
(9)
|
|
Officer
|
|
|
3,000
|
|
|
|
|
|
27.20
|
|
|
6/02/14
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
14.93
|
|
|
2/24/19
|
(1)
|
|
|
|
|
|
|
Todd Brighton,
|
|
|
12,000
|
|
|
|
|
|
14.98
|
|
|
1/29/13
|
(2)
|
|
1,875
|
(6)
|
|
34,500
|
(9)
|
|
Senior Vice President and
|
|
|
9,000
|
|
|
|
|
|
26.81
|
|
|
1/28/14
|
(3)
|
|
3,000
|
(8)
|
|
55,200
|
(9)
|
|
Chief Development Officer
|
|
|
3,000
|
|
|
|
|
|
27.20
|
|
|
6/02/14
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
14.93
|
|
|
2/24/19
|
(1)
|
|
|
|
|
|
|
Susan Lintonsmith,
|
|
|
|
|
|
8,000
|
|
|
14.93
|
|
|
2/24/19
|
(1)
|
|
1,875
|
(6)
|
|
34,500
|
(9)
|
|
Senior Vice President and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000
|
(8)
|
|
55,200
|
(9)
|
|
Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
These
options vest 25% on the first anniversary date of issuance with the balance vesting pro rata on a monthly basis over the following
36-month period and in full on February 24, 2013.
-
(2)
-
These
options vested fully on January 29, 2007.
-
(3)
-
These
options vested fully on January 28, 2008.
-
(4)
-
These
options vested fully on June 2, 2008.
-
(5)
-
Award
of shares of restricted common stock granted on April 17, 2007 vest in equal amounts on December 31, 2008, December 31, 2009 and
December 31, 2010, subject to potential accelerated vesting as described below under"Potential Payments upon Termination or Change in Control".
-
(6)
-
Awards
of shares of restricted common stock granted on February 26, 2008 that vest 25% on each anniversary date of issuance and in full on
February 26, 2012.
-
(7)
-
Award
of shares of restricted common stock granted on August 15, 2008 that vest in equal amounts on December 31, 2011 and December 31,
2012 pursuant to the terms of the Restricted Stock Grant Agreement dated August 15, 2008.
-
(8)
-
Awards
of shares of restricted common stock granted on February 24, 2009 that vest 25% on each anniversary date of issuance and in full on
February 24, 2013.
-
(9)
-
Based
on the closing price of our common stock on December 24, 2009 of $18.40 per share.
35
Table of Contents
Options Exercises and Stock Vested
The following table contains information with respect to the named executive officers concerning option exercises and vesting of
restricted stock during fiscal year 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
Value
Realized on
Exercise
($)
|
|
Number of
Shares
Acquired
on Vesting
(#)
|
|
Value
Realized on
Vesting
($)
|
|
Dennis B. Mullen,
|
|
|
|
|
|
|
|
|
26,562
|
|
$
|
442,368
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Katherine L. Scherping,
|
|
|
|
|
|
|
|
|
625
|
|
$
|
8,650
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric C. Houseman,
|
|
|
6,621
|
|
$
|
37,475
|
|
|
1,250
|
|
$
|
17,300
|
|
|
President and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd Brighton,
|
|
|
25,862
|
|
$
|
223,990
|
|
|
625
|
|
$
|
8,650
|
|
|
Senior Vice President and Chief Development Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan Lintonsmith,
|
|
|
|
|
|
|
|
|
625
|
|
$
|
8,650
|
|
|
Senior Vice President and Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified Deferred Compensation
The following table shows information about the amount of contributions, earnings and balances for each named executive officer under
the Company's Nonqualified Deferred Compensation Plan as of December 27, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last
Fiscal Year
($)
|
|
Registrant
Contributions
in Last
Fiscal Year
($)(1)
|
|
Aggregate
Earnings
in Last
Fiscal Year
($)
|
|
Aggregate
Withdrawals /
Distributions
($)
|
|
Aggregate
Balance at
Last Fiscal
Year-End
($)(3)
|
|
Dennis B. Mullen,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Katherine L. Scherping,
|
|
|
|
|
|
|
|
|
44,464
|
|
|
|
|
|
167,864
|
|
|
Senior Vice President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric C. Houseman,
|
|
|
|
|
|
|
|
|
70,098
|
|
|
|
|
|
266,420
|
|
|
President and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Todd Brighton,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Susan Lintonsmith,
|
|
|
44,112
|
(2)
|
|
|
|
|
19,420
|
|
|
|
|
|
94,782
|
|
|
Senior Vice President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
Company does not make any contributions to the Nonqualified Deferred Compensation Plan. None of the amounts presented above as "Aggregate Earnings" are
reported as compensation for the 2009 fiscal year in the Summary Compensation Table above.
-
(2)
-
All
of this amount was reported in the Summary Compensation Table above under the heading "Salary" for 2009.
36
Table of Contents
-
(3)
-
All
amounts reported in the aggregate balance at last fiscal year end under this column were previously reported as compensation to the named executive
officers in our Summary Compensation Tables for previous years except for any earnings on deferred amounts.
Company executives who are generally considered "highly compensated" pursuant to Internal Revenue Code Section 414(q) are not permitted to
participate in the Company's 401(k) program. To permit these executives to save for retirement, the Company has established the Red Robin Gourmet Burgers, Inc. Deferred Compensation Plan. The
plan permits eligible executives to defer into a hypothetical "account," on a pre-tax basis, up to 75% of the participant's annual salary and generally up to 100% of the executive's
performance-based bonus. A participant's account under the plan only reflects salary and bonus deferrals, and the Company does not provide any matching credits or other
contributions. At the end of fiscal year 2009, there were 18 participants and 81 employees eligible to participate.
Accounts
are credited with earnings and losses based on hypothetical investments selected by the executive from an array of investment options available under the plan which may change
from time to time. As of December 27, 2009, the hypothetical investment options included domestic and international equity, income, short-term investment and blended funds.
Participants can change their investment elections monthly by contacting the plan administrator.
When
participants elect to defer amounts into the plan, they also select when the amounts ultimately will be distributed. Participants can elect to have deferrals for a particular year
paid in a future year if the participant is still employed at that time. Such in-service distributions are made in the form of a lump sum or, if the participant's deferrals for the year
are at least $25,000, the participant can elect to receive payment in up to 5 annual installments. Otherwise, payment of a participant's account is made in the February following the participant's
termination of employment in the form of a lump sum or in 5, 10, or 15 annual installments if the participant so elected at the time of deferral and if the participant's total account balance is at
least $50,000.
A
participant can elect to change a prior distribution election to further delay distribution provided that such new election must be provided at least 12 months before the date
the previously scheduled distribution would have occurred and provided that the new distribution date is at least 5 years from the originally scheduled distribution date. A participant may
obtain a withdrawal prior to the date otherwise scheduled or elected by the participant if the participant incurs an "unforeseeable emergency" (generally including illness, casualty losses, etc.).
With
respect to deferrals after 2004, the plan is intended to comply with the requirements of section 409A of the Internal Revenue Code, which was enacted as part of the American
Jobs Creation Act of 2004. The plan is considered to be "non-qualified" plans for federal tax purposes, meaning that the arrangements are deemed to be unfunded and an executive's interest
in the plan is no greater than that of an unsecured general creditor of the Company.
Employment and Other Agreements
Dennis B. Mullen.
The Company entered into an amended and restated employment agreement with
Mr. Mullen, our chief executive officer, effective March 10, 2008, as amended by letter agreement on August 15, 2008, and further amended on January 11, 2010. The
employment agreement provides for an employment term that expires on December 31, 2012, subject to earlier termination. Mr. Mullen's employment agreement provides certain other benefits,
including a $1,000 per month car allowance and the right to participate in all savings, retirement, medical, welfare and insurance plans and programs to the same extent as other senior executive
employees of the Company. In addition, Mr. Mullen is eligible to participate in the Company's annual incentive compensation plan.
Prior
to the 2010 amendment, Mr. Mullen was eligible to receive a cash bonus for each of the years ended December 31, 2009, 2010, 2011 and 2012 of not less than
fifty-percent (50%) of his annual
37
Table of Contents
base
salary if performance metrics for the year ended December 31, 2009 were met. Although such metrics were satisfied for the year ended December 31, 2009, at the request of the
compensation committee, Mr. Mullen agreed to waive this bonus amount for 2010, 2011 and 2012. As amended, the employment agreement now provides that Mr. Mullen's bonus eligibility in
2010, 2011 and 2012 will be based solely on his participation in the Company's annual incentive plan.
The
January 2010 amendment increased Mr. Mullen's annual base salary from $725,000 to $800,000 for 2010. In addition, the January 2010 amendment terminated Mr. Mullen's
right to be paid or reimbursed for personal travel expenses incurred by Mr. Mullen in commuting between Arizona and Colorado, as well as the tax gross-up related to such payments.
It also deleted the 280G tax gross-up provision set forth in the employment agreement, so that in the event that Mr. Mullen would be required to pay any excise tax imposed by
Internal Revenue Code Section 4999, the Company no longer has an obligation to pay Mr. Mullen such amounts. The January 2010 amendment replaced the tax gross-up provision
with a cutback provision, so that compensation payable to Mr. Mullen that would otherwise trigger the excise tax imposed by Internal Revenue Code Section 4999 may be reduced up to a
defined amount so as not to trigger such tax.
The
employment agreement contains confidentiality, non-compete and non-interference covenants from Mr. Mullen, including a two-year covenant
not to compete with the Company and its subsidiaries in the casual dining restaurant business anywhere in North America and the territories of the U.S. in the Caribbean, including Puerto Rico.
38
Table of Contents
Potential Payments upon Termination or Change in Control
Potential Payments
The following table presents the amount of compensation payable to each of our named executive officers as if the triggering
termination event had occurred on the last day of our most recently completed fiscal year, December 27, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit(1)
|
|
Termination
w/o Cause
|
|
Termination
with Cause
|
|
Death
|
|
Disability
|
|
Change in
Control(9)
|
|
Dennis B. Mullen,
|
|
Salary
|
|
$
|
725,000
|
(2)
|
|
|
|
|
|
|
|
|
|
$
|
1,450,000
|
(3)
|
|
Chief Executive Officer
|
|
Bonus
|
|
$
|
362,500
|
(4)
|
|
|
|
$
|
362,500
|
(9)
|
$
|
362,500
|
(9)
|
$
|
0
|
(5)
|
|
|
Health Benefits
|
|
$
|
2,069
|
(6)
|
|
|
|
|
|
|
|
|
|
$
|
4,138
|
(7)
|
|
|
Tax Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
(8)
|
|
|
Acceleration of Restricted Stock
|
|
$
|
1,840,000
|
(10)
|
|
|
|
$
|
1,840,000
|
(10)
|
$
|
1,840,000
|
(10)
|
$
|
2,064,259
|
(11)
|
|
|
Acceleration of Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
69,400
|
(12)
|
Katherine L. Scherping,
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
285,000
|
(2)
|
|
Senior Vice President
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
(5)
|
|
and Chief Financial
|
|
Health Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,056
|
(6)
|
|
Officer
|
|
Tax Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
89,700
|
(11)
|
|
|
Acceleration of Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,760
|
(12)
|
Eric C. Houseman,
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
800,000
|
(3)
|
|
President and Chief
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
(5)
|
|
Operating Officer
|
|
Health Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
6,112
|
(7)
|
|
|
Tax Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
(8)
|
|
|
Acceleration of Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
179,400
|
(11)
|
|
|
Acceleration of Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
96,560
|
(12)
|
Todd Brighton,
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
295,000
|
(2)
|
|
Senior Vice President
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
(5)
|
|
and Chief Development
|
|
Health Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
3,056
|
(6)
|
|
Officer
|
|
Tax Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
89,700
|
(11)
|
|
|
Acceleration of Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
68,800
|
(12)
|
Susan Lintonsmith,
|
|
Salary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
315,000
|
(2)
|
|
Senior Vice President
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0
|
(5)
|
|
and Chief Marketing
|
|
Health Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer
|
|
Tax Gross-Up
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Restricted Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
89,700
|
(11)
|
|
|
Acceleration of Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,760
|
(12)
|
-
(1)
-
A
number of our employee benefit and incentive pay plans provide for payment upon termination of employment of any participant. If terminated on
December 27, 2009, each of the named executive officers would have received benefits and payments under these plans in addition to the amounts described in the table above.
-
(2)
-
Represents
the total amount of continued payments for a period of twelve months following the effective date of termination based on the named executive
officer's 2009 base salary.
-
(3)
-
Represents
the total amount of continued payments for a period of twenty-four months following the effective date of termination based on the
named executive officer's 2009 base salary.
-
(4)
-
Represents
the pro rata bonus amount Mr. Mullen would have received based on his employment with the Company for the entire fiscal 2009 year.
-
(5)
-
No
aggregate bonus amount is reflected here as it was determined that none of the named executive officers were eligible to receive a bonus for 2008, the
most recently completed fiscal year prior to December 27, 2009.
-
(6)
-
Consists
of the costs of continuing the coverage for the named executive officer and his or her spouse under the Company's existing medical, dental and
prescription insurance plans for a period of twelve months following the effective date of termination.
-
(7)
-
Consists
of the costs of continuing the coverage for the named executive officer and his or her spouse under the Company's existing medical, dental and
prescription insurance plans for a period of twenty-four months following the effective date of termination.
39
Table of Contents
-
(8)
-
Represents
the amount of the gross-up payment for Internal Revenue Code Section 280G purposes based on a change in control event
occurring on December 27, 2009. In January 2010 the Company amended Mr. Mullen's employment agreement, including deletion of the 280G tax gross-up provision. In the future,
Mr. Mullen would be required to pay any excise tax imposed by Internal Revenue Code Section 4999, and the Company no longer has an obligation to pay Mr. Mullen such amounts.
-
(9)
-
Represents
the amount Mr. Mullen or his estate would have received for termination of Mr. Mullen's employment due to disability or death on
December 27, 2009.
-
(10)
-
As
discussed below, the change in control provisions in Mr. Mullen's amended employment agreement and the change in control agreements with the
other named executive officers are double trigger provisions, and thus any payments described in the above table are required to be made only if the Company terminates the executive's employment
without cause or the executive resigns with good reason, within the defined protection period following the change in control.
-
(11)
-
The
values included in the table above are based on the number of restricted shares that would have vested on December 27, 2009, multiplied by the
closing sales price of the Company's common stock on The NASDAQ Global Market® as of December 24, 2009, the business day immediately preceding such date ($18.40).
-
(12)
-
The
change in control agreements for the named executive officers (and not including Mr. Mullen) provide that upon a termination in connection with
a change in control, the executive officer has the right to require the Company to pay the difference between the fair market value of the Company's common stock on December 27, 2009 and the
exercise price of the options held by the named executive officer on an aggregate basis.
Under Employment Agreements
Dennis B. Mullen.
Mr. Mullen's amended employment agreement provides that he is entitled to payment of certain compensation upon
termination
of his employment. The employment agreement terminates automatically in the event of Mr. Mullen's death or upon 30 days advance written notice from the Company in the event that he
becomes disabled (as defined in the employment agreement). In the event Mr. Mullen's employment terminates on account of his death or disability or as a result of the voluntary resignation of
Mr. Mullen, he (or his estate) is entitled to receive his base salary and accrued vacation pay through the date of termination and any compensation previously deferred by Mr. Mullen or
due pursuant to any applicable welfare or benefit plans. He or his estate is also entitled to receive under such circumstances a pro rata share of any annual incentive bonus for which he would have
otherwise been eligible, determined on the basis of the number of days during which he was employed by the Company during the applicable fiscal year.
The
Company may terminate Mr. Mullen's employment at any time for "cause," which is defined in the employment agreement to include, among other things, neglect in the performance
of his duties, engaging in certain acts of misconduct (including a violation of the Company's code of ethics or other policies) or failure to follow lawful directives from the board of directors. In
the event Mr. Mullen's employment is terminated for cause, he is entitled to receive his base salary and accrued vacation pay through the date of termination.
The
employment agreement contains a provision permitting a termination by the Company in connection with a transition event. As defined in the agreement, a transition event is a
termination of Mr. Mullen's employment as chief executive officer with the mutual approval of a majority of the board
and Mr. Mullen in connection with the hiring or promotion of another person into such positions with at least 30 days advance written notice. Upon the occurrence of a transition event,
Mr. Mullen is entitled to receive his base salary and accrued vacation pay through the date of termination and any compensation previously deferred by Mr. Mullen or due pursuant to any
applicable welfare or benefit plans. Upon the execution of a general release of the Company, he is also entitled to receive under such circumstances a pro rata share of any annual incentive bonus for
which he would have otherwise been eligible, determined on the basis of the number of days during which he was employed by the Company during the applicable fiscal year.
The
Company may also terminate Mr. Mullen's employment without cause with at least 30 days advance written notice. If, prior to December 31, 2012, the expiration of
the stated term of the employment agreement, Mr. Mullen's employment is terminated for any reason other than for cause or
40
Table of Contents
other
than in connection with a transition event, then Mr. Mullen is entitled to receive his base salary and accrued vacation pay through the date of termination. In addition, conditioned upon
delivering a general release to the Company, under the amended employment agreement Mr. Mullen is also entitled to receive the following payments and benefits:
-
-
continued payment, for a period consisting of the lesser of twelve months following the effective date of termination or
the remainder of the existing employment period, of his base salary as in effect immediately prior to the date of termination;
-
-
payment of the pro rata share (determined on the basis of the number of days during which he was employed by the Company
during the applicable fiscal year) of any annual incentive bonus for which he would otherwise have been eligible; and
-
-
payment or reimbursement of the cost of continuing coverage for Mr. Mullen and his spouse under the Company's then
existing medical, dental and prescription insurance plans for a period consisting of the lesser of twelve months following the effective date of termination or the remainder of the existing employment
period.
In
addition, under Mr. Mullen's amended employment agreement, Mr. Mullen is entitled to receive severance payments in the event his employment is terminated upon the
occurrence of a double trigger change in control. In such a circumstance, Mr. Mullen is entitled to receive the same payments as he
would otherwise receive in the event of a termination without cause, except that he will receive an amount equal to two times his annual compensation versus an amount equal to one times his annual
compensation. The protection period for such a termination is 18 months. The definition of change in control is substantially similar to the definition contained in the 2007 Plan, as discussed
below, except that the amended employment agreement provides that a change in control occurs if a majority of the individuals who serve in the same class of directors cease for any reason to
constitute at least a majority of that class of directors. Good reason is defined as a reduction in Mr. Mullen's compensation, relocation of the Company's headquarters to a location more than
20 miles from the existing location, or a significant reduction in the then-effective responsibilities of Mr. Mullen as chief executive officer without Mr. Mullen's prior
written consent.
In
January 2010 the Company amended Mr. Mullen's employment agreement, including deletion of the 280G tax gross-up provision. In the future, Mr. Mullen would be
required to pay any excise tax imposed by Internal Revenue Code Section 4999, and the Company no longer has an obligation to pay Mr. Mullen such amounts.
Change in Control Agreements
In addition to change in control provisions included in Mr. Mullen's amended employment agreement, we entered into change in
control agreements with each of the other named executive officers on March 10, 2008.
The
change in control agreements provided that if the executive resigns for good reason or is terminated by the Company other than for cause or disability or other than as a result of
the executive's death during the 18-month period following a change in control, the executive is entitled to receive the following payments and benefits, except that Mr. Houseman is
entitled to the payments described in the paragraph below:
-
-
continued payment, for a period consisting of twelve months following the effective date of termination, of his or her
base salary as in effect immediately prior to the date of termination;
-
-
one times the annual bonus amount earned for his or her performance in the last completed calendar year prior to the
change in control; and
41
Table of Contents
-
-
payment or reimbursement of the cost of continuing coverage for the executive and his or her spouse under the Company's
then existing medical, dental and prescription insurance plans for the twelve-month period following the effective date of termination or the remainder of the existing employment period.
The
primary differences between the change in control agreement with Mr. Houseman and the change in control agreements with the other named executive officers is that
Mr. Houseman's agreement provides for a severance payment equal to two times his annual compensation as compared to one times annual compensation and payment for benefits for
twenty-four months rather than twelve months. In addition, Mr. Houseman's agreement provides for a gross-up payment for Internal Revenue Code Section 280G
purposes on the terms and conditions set forth in his agreement.
The
definition of change in control is substantially similar to the definition contained in the 2007 Plan, as discussed below. Good reason is defined as a reduction in the executive's
compensation, relocation of the Company's headquarters to a location more than 20 miles from the existing location, a significant reduction in the then-effective responsibilities of the
executive without the executive's prior written consent (for this purpose, if the Company ceases to be a publicly-traded corporation, the executive will not be deemed to have suffered such a reduction
in the nature and scope of his or her responsibilities solely because of the change in the nature and scope thereof resulting from the Company no longer being publicly-traded), or failure by the
Company to obtain the assumption of the obligations contained in the change in control agreement by any successor to the Company. The agreements also contain standard confidentiality and
non-solicitation provisions.
Incentive Plans
The following is a description of the change in control provisions contained within our equity incentive plans under which there are
awards currently outstanding:
2000 Management Performance Common Stock Option Plan.
Outstanding options under the 2000 Stock Option Plan may become fully vested in
connection with
the sale or disposition of substantially all of our common stock or our assets. In addition, the plan administrator may provide for the assumption, substitution or settlement of the outstanding
options under the 2000 Stock Option Plan in the event of a "control transfer." A control transfer is defined in the 2000 Stock Option Plan and generally includes any person or group of persons who
were not stockholders on April 30, 2000 becoming the owner of more than 50.0% of our outstanding voting shares, our merger, consolidation, or other reorganization in which any such person or
group owns more than 50.0% of the outstanding voting shares of the surviving or resulting entity, or all or substantially all of our assets are sold or otherwise transferred to any such person or
group.
2002 Stock Incentive Plan.
Each award granted under the 2002 Stock Incentive Plan may, at the discretion of our board of directors or a
committee
appointed by our board of directors to administer the plan, become fully vested, exercisable, or payable, as applicable, upon a change in control event if the award will not be assumed or substituted
for or otherwise continued after the event. A change of control, as defined in the 2002 Stock Incentive Plan, generally includes:
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stockholder approval of our dissolution or liquidation;
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certain changes in a majority of the membership of our board of directors over a period of two years or less;
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the acquisition of more than 30.0% of our outstanding voting securities by any person other than a person who held more
than 20.0% of our outstanding voting securities as of the date that the 2002 Stock Incentive Plan was approved, a company benefit plan, or one of their affiliates, successors, heirs, relatives or
certain donees or certain other affiliates;
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certain transfers of all or substantially all of our assets; and
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a merger, consolidation or reorganization (other than with an affiliate) whereby our stockholders do not own more than
50.0% of the outstanding voting securities of the resulting entity after such event.
In
addition, if we terminate any participant's employment for any reason other than for cause either in express anticipation of, or within one year after a change in control event, then
all awards held by that participant will vest in full immediately before his or her termination date. The plan administrator may also provide for alternative settlements (including cash payments), the
assumption or substitution of awards or other adjustments in the event of a change of control event or in the context of any other reorganization of the Company.
2004 Performance Incentive Plan.
Generally, and subject to limited exceptions set forth in the 2004 Plan, if any person acquires more
than 30% of the
outstanding common stock or combined voting power of the Company, if certain changes in a majority of our board of directors occur over a period of not longer than two years, if stockholders prior to
a transaction do not continue to own more than 50% of the voting securities of the Company (or a successor or a parent) following a reorganization, merger, statutory share exchange or consolidation or
similar corporate transaction involving the Company or any of our subsidiaries, a sale or other disposition of all or substantially all of the Company's assets or the acquisition of assets or stock of
another entity by us or any of our subsidiaries, or if the Company is dissolved or liquidated, then awards then-outstanding under the 2004 Plan may become fully vested or paid, as
applicable, and may terminate or be terminated in such circumstances. Unless otherwise provided by the plan administrator, a change in control in and of itself generally will not trigger the
accelerated vesting of awards granted under the 2004 Plan unless the awards will not be assumed by a successor or will otherwise not continue following the change in control event. The plan
administrator also has the discretion to establish other change in control provisions with respect to awards granted under the 2004 Plan. For example, the Administrator could provide for the
acceleration of vesting or payment of an award in connection with a change in control event that is not described above and provide that any such acceleration shall be automatic upon the occurrence of
any such event.
Amended and Restated 2007 Performance Incentive Plan.
Generally, and subject to limited exceptions set forth in the 2007 Plan, if any
person acquires
more than 50% of the outstanding common stock or combined voting power of the Company, if there are certain changes in a majority of our board of directors, if stockholders prior to a transaction do
not continue to own more than 50% of the voting securities of the Company (or a successor or a parent) following a reorganization, merger, statutory share exchange or consolidation or similar
corporate transaction involving the Company or any of our subsidiaries, a sale or other disposition of all or substantially all of the Company's assets or the
acquisition of assets or stock of another entity by us or any of our subsidiaries, or if the Company is dissolved or liquidated, then awards then-outstanding under the 2007 Plan may become
fully vested or paid, as applicable, and may terminate or be terminated upon consummation of such a change in control event. However, unless the individual award agreement provides otherwise, with
respect to executive and certain other high level officers of the Company, upon the occurrence of a change in control event, no award will vest unless such officer's employment with the Company is
terminated by the Company without cause within the two-year period following such change in control event. The Administrator also has the discretion to establish other change in control
provisions with respect to awards granted under the 2007 Plan. For example, the Administrator could provide for the acceleration of vesting or payment of an award in connection with a change in
control event that is not described above and provide that any such acceleration shall be automatic upon the occurrence of any such event.
There
are currently no amounts payable to or accrued for payment to any named executive officer under the change in control provisions contained in the Plans.
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Director Compensation
The following table sets forth a summary of the compensation we paid to our non-employee directors in 2009:
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Name
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Fees Earned
or Paid
in Cash
($)
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Option
Awards
($)(1)
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Restricted
Stock
Awards
(#)(1)
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All Other
Compensation
($)(2)
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Total
($)
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Robert B. Aiken(3)
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Edward T. Harvey
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52,250
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10,577
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13,238
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76,065
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Lloyd L. Hill(3)
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Richard J. Howell
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60,000
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10,577
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13,238
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83,815
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Pattye L. Moore
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65,000
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10,577
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13,238
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88,815
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Stuart I. Oran(3)
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James T. Rothe
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49,750
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10,577
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13,238
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73,565
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J. Taylor Simonton
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58,250
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10,577
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13,238
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82,065
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Gary J. Singer
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57,750
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10,577
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13,238
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69,565
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Marcus L. Zanner
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13,500
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29,649
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13,238
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56,387
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(1)
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Messrs. Harvey,
Howell, Rothe, Simonton and Singer and Ms. Moore were each awarded options to purchase 2,000 shares of common stock in May
2009. The fair value of such options was computed in accordance with the authoritative guidance for accounting for stock compensation at $5.29 per share. In May 2009, each director was issued 750
shares of non-vested common stock with a value of $17.65 per share. Mr. Zanner was awarded options to purchase 5,000 shares of common stock in June 2009 when he joined the board.
The fair value of such options was computed in accordance with the authoritative guidance for accounting for stock compensation at $5.93 per share. As of the end of the fiscal year 2009, the aggregate
number of options and restricted stock outstanding for each director was as follows:
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Options
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Restricted
Stock
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Robert B. Aiken(3)
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Edward T. Harvey
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19,500
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750
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Lloyd L. Hill(3)
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Richard J. Howell
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19,500
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750
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Pattye L. Moore
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9,500
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|
750
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Stuart I. Oran(3)
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James T. Rothe
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24,500
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750
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J. Taylor Simonton
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19,500
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750
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Gary J. Singer
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24,500
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750
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Marcus L. Zanner
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5,000
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(2)
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Each non-employee director is entitled to receive dining card for complementary food and beverages at the Company's restaurants. In 2009, the dining card value used by each director was less than $10,000. The value to the
non-employee directors is approximately 59% of the amount provided as a meal discount which represents the cost of goods and labor at the Company's restaurants.
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(3)
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Each of Messrs. Aiken, Hill and Oran joined the board in March 2010. Accordingly, none of these directors received compensation reportable herein during fiscal year 2009.
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